The Red Flag Group®



Why is this a risk?

Most businesses recognise that having a diverse third-party pool is a major competitive advantage and a powerful business tool.

A third-party diversity programme aims to proactively identify, build relationships with and purchase goods and services from certified small businesses as well as enterprises owned by minorities or disadvantaged groups (including women, veterans, LGBT+ people and disabled persons) that can help achieve corporate objectives.

Examples of how this risk could affect you

  • A protest movement such as ‘Black Lives Matter’ could blockade a factory that supplies you with key materials due in response to the factory’s poor diversity or civil rights record
  • You may not be able to sell to a government if you are not able to show you are using suppliers with a high enough level of minority ownership.

Which third parties could be engaged in this area?

Any third parties may have diversity conditions imposed on them, depending on company policy or government regulations.

How are these risks managed?

Diversity risks are normally managed through:

  • understanding the third parties’ businesses and the services that they are providing to you
  • independently validating that any criteria for diversity have been met.