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How to start the modern slavery risk assessment

Published 16th Jul 19 - by Hayley Jarick

An important part of responding to the new Modern Slavery reporting requirement is the identification and assessment of a company’s modern slavery risks. GHD’s team of human rights and modern slavery experts advocates for a holistic approach to risk identification and assessment, which covers not only modern slavery but also broader human rights risks. 

No business is free of human rights risks – per the United Nations Guiding Principles for Business and Human Rights (UNGPs) these are risks of adverse impacts to the people affected (i.e. similar to how safety risks are considered), rather than merely the risk of adverse impacts to the prospects of the business. However, just as with safety risks, this ‘human rights lens’ focussed on the potential impacts to people offers additional business benefit, as it may uncover ‘blind-spots’ in the existing enterprise risk management process.

Understanding how a company may interact with key risk factors through its operations, supply chains or partnerships can be done through a gap analysis of existing policies, supply chain mapping, key stakeholder interviews, in-country assessments, and engagement with employees and external stakeholders, in particular with affected rights holders. 

Findings of this process can then be used to assess human rights and modern slavery risks according to the severity of potential impact and likelihood of impact occurring – which can be mapped on a matrix, as shown below.

Risk Matrix

This enables prioritisation of resources and efforts in areas that have a higher risk of exposure to the more severe or more likely human rights (and modern slavery) risks.

A recent initial human rights risk assessment for one of GHD’s ASX 100 clients identified 12 key human rights risks across the business and its supply chain chains – that is, 12 identified human rights with high severity or high likelihood of occurring. 

One of the key findings highlighted difficulties in knowing how human rights risks are identified, in particular in the company’s overseas operations. While company stakeholders had confidence in the understanding of the human rights risks directly affected by the company’s Australian headquarters, limited knowledge and confidence existed as to what extent its non-Australian operations were exposed to some severe human rights risks. This finding is important as it reminds us that while identifying and managing supply chain risks is important, businesses should not neglect its responsibilities within its own direct operations.