How corporate intelligence helps mitigate risks and drives decision making

“What is Corporate Intelligence?”, “What is Competitive Intelligence?”, and “how are the two different?” - we hear these and similar questions very frequently. As a leading name in Risk Advisory Services with customized Corporate Intelligence Services offerings highly valued by clients to manage and mitigate third party association risks, we at MBG Corporate Services answer these questions and more in our primer on Corporate Intelligence, a key part of third party risk mitigation for businesses today.

What is corporate intelligence is the gamut of intelligence gathering and due diligence activities with regards to a third party’s business, personnel, and any other variables as may be pertinent. Corporate intelligence services, as the name suggests, are the services related to them. A subset of Risk Advisory services, these include – and but are not limited to - what is corporate due diligence.

Broadly, corporate intelligence is defined as the attentive collection and analysis of information for an unacquainted subject to deliver key insights to key decision-makers in support of major business concerns, corporate acts such as an investment or acquisition, internal inquiry, or extraction of risk factors. This information is largely obtained through the public domain, open sources, and proprietary databases.

Companies often seek corporate intelligence prior to entering into investments, joint ventures, and acquisitions.

What is Corporate Due Diligence?

The corporate due diligence meaning is often taken to be used interchangeably with corporate intelligence, but corporate due diligence meaning the background checks conducted on the business activities and key financial activities of a company can be a subset of corporate intelligence which is more comprehensive and takes a broader view encompassing other additional factors such as the overall sectoral and economic landscape.

However, while what is corporate due diligence and what is corporate intelligence can overlap, corporate intelligence is not to be confused with competitive intelligence.

Difference between “Corporate Intelligence” and “Competitive Intelligence”

What is competitive intelligence? Competitive intelligence is the collation, analysis, and use of information on competitors (and sometimes customers and the market) with the objective of gaining a competitive edge in the market through such insights. In contrast, corporate intelligence is conducted on potential associates (as opposed to competitors) with the objective of preventing any risks arising from the association. Further, Corporate Intelligence is Target Specific where Competitive Intelligence may not be.

So why (and when) do organizations need Corporate Intelligence?

The above discussion makes the importance of what is corporate intelligence quite clear. In a nutshell, it is to mitigate the risk of associating with an unknown / less known third party in a heavily regulated socio-economic environment.

Corporate intelligence is therefore particularly important to the following situations by specific type of the third party

1. Risk assessment before onboarding third parties such as customers, vendors and suppliers, dealers and distributors, brokers, agents, and contractors
2. Investing in a new business, collaboration with another business, and entering a strategic business alliance or joint venture association. Pre-investment due diligence is crucial in this type when investment decisions are involved.
3. Appointment of senior management officials, conflict of interest review, on-demand background verification, and lifestyle assessment

How Corporate Intelligence helps mitigate risks and drives decision making

Corporate intelligence services gather information from various types and forms of due diligence and background checks to assess, evaluate and identify risk from a third-party association.

Corresponding to the three specific situational types above, for instance, MBG’s corporate intelligence services within the Risk Advisory Services vertical include:

1. Third-Party Due Diligence – for third party onboarding

• Validation of business operations
• Credit risk assessment
• Assessment of bona fide credentials/genuineness of the business
• Compliance risk assessment

2. Pre-transaction Due Diligence – for investments, alliances, and collaborations

• Pre-investment due diligence
• Pre borrowing risk assessment
• Assessment of financial position and creditworthiness
• Market assessment of operations
• Reputational assessment

3. Executive Senior Management Due Diligence – for personnel management

• Validation of previous work experience
• Identification of track record
• Identification of undisclosed reasons for previous job exit

An Integrity Due Diligence is one of the most important types of due diligence in corporate intelligence services, or even in our broader Risk Advisory services framework. Integrity Due Diligence is the background checks, investigation, and obtaining of insights for a deeper examination of the integrity of a third party and what corruption risks may arise from associating with it. Integrity due diligence checklist would include checks on items such as:

• Beneficial ownership, Business rationale Assess the purpose and economic rationale of the Counterparty to establish a legitimate business relationship with a bona fide counterparty not doing business for purposes of Money Laundering, Financing of Terrorism, or tax evasion.
• Sanctions To establish that there are no Sanctions against a third party individual or entity for involvement in fraud, corruption, terrorism, human rights violations, money laundering, terrorist financing, tax evasion, crimes against world peace, political and economic stability, etc.
• Social Media Scanning To establish social media commentary against the Target (Entity/individual) discovering the facts of reputational issues.
• Politically Exposed Persons To identify any potential Politically Exposed Persons linked to the Counterparty or its activity

By uncovering hidden information on a Counterparty with whom your business is exploring doing business – whether as a customer, vendor, or alliance partner, the due diligence with its various checks, investigations, and activities constituting what is corporate intelligence exposes the risks involved (or not) in the potential association. It thus mitigates legal, financial, reputational, and other risks. Going beyond, corporate intelligence thus provides the sound basis for decision making – from a Go / No Go decision at extremes to various decisions on negotiations and posturing.

Why Us

At MBG Corporate Services, our corporate intelligence services are part of our renowned, market-leading, and highly reputed Risk Advisory services vertical. As mentioned above, we offer Third-Party Due Diligence, Pre-Transaction Due Diligence, Executive Senior Management Due Diligence, and Integrity Due Diligence as part of our customized service offering.

We assist clients by helping them make informed decisions through the identification of hidden factors or red flags Counterparty relationships. We highlight issues of concern that may cause reputational or financial damage to an organization, its directors, and its shareholders. Our teams assimilate and analyze publicly available information to provide accurate and reliable corporate intelligence on designated third parties.

Download our service deck: Corporate Intelligence

Article contributed by:

Abhijeet Sharma

COO – Risk, Assurance, Transaction Advisory Services & Business Development - Non Foreign Enterprise