Export Compliance Program Second Element: Risk Assessment 

Export Compliance Program Second Element: Risk Assessment

July 13, 2021

(The Exporting Source) by Blake Gill *

Last time we discussed our first element of management commitment. Once you have successfully gained the support from management that is required to properly create and run an Export Compliance Program (ECP), a risk assessment should be completed to identify those risks that will potentially be faced by your organization.

The assessment will take a closer look at how the organization operates within the constraints specific to the business. Some of these areas are identifying the classification of your products, knowing your current customers, identifying the process for adding new customers, what the end use for your products are, what are the terms of your organization’s sales, and what documentation is required for your organization’s activities. Just as the elements of an ECP are not a set group and changes with the organization and its activities, so do the areas of risk assessment.

Some organizations fail to realize that exports can occur without shipping a product to a customer. When technology or data is available to a large group of individuals, such as a demo booth at a trade show, the export compliance group needs to identify and communicate a plan with the organization to properly release that information. This type of planning is best executed by having made the effort to identify classifications for all the products within the organization.

If your organization is responsible for service activities, then it must also identify the end-item’s classification. A system that incorporates your product may be controlled, which then makes your servicing of that item a controlled activity. If the item that is being serviced was not properly exported, your company could be liable for service on the improperly exported item.

The organization’s structure must also be analyzed to determine if the proper reporting and communication functions are in place. Poor communication within a disorganized structure is a recipe for disaster for a compliance team! Export facilitators such as freight agents are also important to review when looking at the organization’s structure to identify potential failure points.

Many times, when an ECP is put into place, potential risks are not researched and factored into the plan. The business usually puts a higher priority on fulfilling orders and creating shipments than taking the time to conduct a risk assessment, leading to more work and frustrations down the road. Taking the time to analyze the potential risks and understand them will help you to create a roadmap to success for your organization in the next elements of the ECP.

* Blake Gill is an experienced International Trade Compliance professional with a demonstrated history of work in the technology industry. He has many years of experience working with export control, customer screening and item classification over a wide variety of products. Additionally, Blake has performed the duties of Empowered Official at multiple international companies.

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