# Third-party due diligence: vetting partners and suppliers

Why the risk in a business relationship often sits with the other party, and a proportionate way to assess it before you commit.

A business takes on some of the risk of every partner, supplier and distributor it works with. When a third party fails, cuts corners or misrepresents itself, the consequences land on the business that chose them.
## Be proportionate
Not every supplier needs the same scrutiny. Tier third parties by what they touch: critical operations, sensitive data, regulatory exposure, or significant spend. Concentrate effort on the top tier.
## Core questions for any material relationship
- Is the entity what it claims to be, and who ultimately owns and controls it?- Is it financially stable enough to deliver over the life of the contract?- Does it hold the licences, registrations and insurance its work requires?- What does its track record look like, from sources other than its own references?- Are there public records of disputes, regulatory action or reputational issues?
## Use public sources first
Corporate registries, court records, regulatory databases and credible news coverage answer many of these questions at low cost. Gaps or inconsistencies between what a party says and what the public record shows are worth pursuing.
## Build it into the contract
Diligence findings should shape terms: audit rights, notification obligations, termination triggers and appropriate warranties. Contract terms are a legal matter and should be reviewed by counsel.
## Revisit periodically
Due diligence is a snapshot. Ownership, finances and conduct change. Re-check critical relationships on a set schedule and whenever a warning sign appears.

Source: https://adlerlynx.ca/insights/third-party-due-diligence/