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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