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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