The era of Assurance 4.0: Achieving product integrity

Businesses face a rapidly changing world, with a heightened focus on ESG considerations, supply chain complexity and evolving cybersecurity threats. These powerful new trends have combined with more traditional risks – across assets, people and systems – to create a new era of risk management. We call it the era of Assurance 4.0. Here, LRQA’s Chief Commercial Officer, Stuart Kelly, dives into the second episode of our Assurance 4.0 mini-series, exploring ‘achieving product integrity’ as a key challenge for clients across sectors, from food to aerospace.

Transcript

Welcome back all to LRQA's Future in Focus podcast where we like to talk about all things risk management. My name is Holly Johnston, Global External Communications Manager for LRQA, but who I really want to introduce is my guest, Stuart Kelly, LRQA's Chief Commercial Officer. Welcome back, Stuart. How are you?

I'm very good, Holly. Thanks again for the great welcome. You always make me feel as though I'm a very valued member of this team, and I do love doing these podcasts with you. 

Oh, it's so good to have you back. Now I just want to recap for our listeners first, actually, Stuart,  that this episode is part of a mini-series with yourself where we explore the era of Assurance 4.0.  You've heard of Industry 4. 0, now we have Assurance 4. 0, the new era of risk management. At LRQA, we define this new era by three global trends. That's ESG considerations, supply chain complexity, and the need for cybersecurity maturity.  Now combine those new trends with the traditional risks across assets, people, and systems, and you've suddenly got a whole host of challenges that I know our clients are coming to us for support with. So what are those client challenges? We have assuring assets and management systems, achieving product integrity, sourcing responsibly, navigating the energy transition and achieving net zero, and lastly, strengthening cybersecurity maturity. Now today is all about the second in that list of client challenges, achieving product integrity. Stuart, I'm coming to you now. Can I ask you to start us off and explain exactly what we mean by that?  

Yes, sure, Holly. I think, you know, in simple terms, it's about making sure that we have met the demand that our consumers and clients are placing on us for safe, authentic, high quality products. And the products are not just the end result, but it's also the components, the services, and the raw materials that actually go into them. To those products. I think what we're seeing is and everyone knows this. We've got a population now that is much more connected around the world. You know, we've got social media that in real time can actually share stories of things going wrong of examples of responsible sourcing issues and challenges around the world. And therefore, that demand is now an expectation on the consumer can do their own research and find out in no time at all about the brands that they are buying around the products that they are buying and around any of those horror stories around the products and services. So this is this is really around giving confidence to your client, giving confidence to the consumer that your product is authentic, that it is safe, that it has the integrity that someone would expect from it when they're actually putting their hand in the pocket and paying for it as the end result. And we're talking about Number two, we're talking about product integrity in our, in our mini-series here, but in actual fact, there's so intrinsically woven, it's quite frightening because, you know, people are now being asked to put the trust in apps, in things that go into your Apple wallet or any other wallets that are available on the market, of course, and all down to the data that you're actually then sharing with companies that you trust when you're buying their products. So, you know, we talk about cybersecurity in another mini-series, but in actual fact, these things are now woven together into product integrity and into giving that consumer confidence in your brand and in your product.  

Absolutely. And I was going to ask next, you know, why should clients be taking this so seriously in the era of Assurance 4.0? But I think you've nailed it there with that concept of trust and how risk management becomes a connector between businesses and their consumers. So, I'm seeing so much media coverage about product recalls and the expectation to see a product journey through the entire supply chain journey. So this is really gathering momentum here, right? 

Absolutely. And I think it's gathering moment not because we're becoming worse at it necessarily, but because there are more opportunities for breaches. There are more opportunities for things to go wrong as we have an ever more connected supply chain and an ever more connected, you know, end to end product design to distribution and sale kind of component. So we're giving more opportunities for things to go wrong, but we've also got a much more aware world and a world that is almost looking for things to go wrong. So I don't think in actual fact, things are becoming worse. I think what's becoming more challenging is there are bigger opportunities for unethical people to take advantage of businesses out of situations to make money themselves, or, or just to cause some disruption that are opportunities for People all around the world to highlight things that haven't gone quite right and cause some sensationalism. And I'm sure there's also a little bit of fake news, which can damage brands and, you know, put them in a, in a situation where they have to be  defending something that may not actually be true. And therefore, you know, having that trust, having that confidence in your product, having that integrity as a nailed on expectation is something that can help them do that. Defend the situation should things like that happen. So yeah, I don't think we should well on the fact that we're seeing more and more of it as the world is becoming a worse place. It's, it's more challenging for a business to get ahead of these things. It's more challenging for a brand to not have the negative news. And therefore they have to be thinking of products integrity now as a as a kind of de facto part of their business and not something that from time to time they have to check on and make sure that there are no holes in the floor. As it were, they have to be doing this every single day.  

That is such an important distinction to make. It kind of ties in with the concept of continuous assurance as well. You know, that it's not enough now to have a one moment in time view of your risks or your reputation.  It has to be 24/7. That's where we're headed. So next, I'd love to talk about our client experiences, and this is why I love having you on these podcasts, Stuart, because you work with our clients every single day and you can give insight from the market. So companies, surely they need to understand the risk that exists from the origin of their materials right the way through to the product sale is their responsibility, that entire journey.  So are businesses struggling with that? Do you have examples from across specific sectors where we work with clients?

Yes, sure. I mean, obviously, I don't want to name a lot of names, but I think in terms of sectors, we've got a continual food fraud threat, okay? You know, the food market has become a great place for a organized crime, quite frankly, to actually infiltrate and put people in jail. put fraudulent or substituted products into the market. And there are loads of examples of that from, from the Horse Gate scandal in the UK not so long ago, right through to, you know, examples of cardboard in pepper and spices and so on that have happened around the world. So you can Google food fraud and a million things will actually come up and jump in front of you. We've had an issue with one famous brand not so long ago and, plane safety and multiple safety issues that, again, that they need to be thinking about and some of the things that they actually have to, to kind of address quite quickly to get that brand back on track. And, you know, we, we spend a lot of time talking to customers and clients around this and, you know, one of the kind of senior directors in one client said to me, the way that we look at it as a business, it's like a bank of trust, and it takes an awful long time to make that deposit with your consumer, with your end user, that they have to slowly but surely build trust in your brand. And yet one withdrawal, one incident can take all of that away overnight or in seconds. So the struggling to the end. They're struggling to make sure that all of the gaps in their business are filled. And that's partly down to the fact that they don't have that full visibility. You know, most businesses around the world, particularly global brands, will have a really strong view on their next tier down. So they will know quite confidently and competently who their main suppliers are. But then it starts to get a little bit more difficult when you go under the layer. You know, those suppliers are buying from other sub suppliers. And the controls that they have in place may be rigorous, but that visibility isn't always known to the brand because they don't have that level of control over the next level down. And then of course you go to the next tier again and so on and so on to the very point where if we take food as an example, it's very difficult to know which farm a particular animal or product or raw material is coming from and whether that is, you know, being ethically sourced and responsibly sourced or not, because you're now relying not on you, not even on the next tier in your supply chain, but perhaps two, three, or even four tiers further down. And all it takes is again, someone out there in the market with their camera, with their mobile phone to see something on a farm that they don't like. And you can be exposed for something that with the best one in the world, you didn't even know about. So I think yeah, the main concern we're getting from our clients is help us get visibility. Help us understand where the gaps are. Help us understand which of these gaps are critical and most important, because we can't do everything at the same time. We have to prioritise our risks, prioritise what will help our business, you know, close some of these gaps.  we want to address them all, but we will have to do it in order and help us. In terms of deciding and defining how we can close some of the gaps, because this is new when you know, this is the world has changed and the gaps that are opening up and the challenges that are facing us in terms of cyber risk and so on are different from we've faced before. And finally on that Holly, I think the other thing that people have begun to realize and we're talking more and more to clients around is the use of data as part of this. It was the big saviour, you know, well, we use data, we'll use artificial intelligence, we'll drive decision making, we'll be proactive, we'll be, you know, risk averse, and we can actually predict the next problems and get ahead of them. And that was all in concept, fantastic. In reality, people have too much data now. And our clients are concerned with actually getting something meaningful out of what they've got, because they're struggling to put it in a format where they can interpret it in a way that gives them the so what. So what does it mean? What should I be doing about it? And asking people like LRQA for that external guidance, that external help, where we can bring not only their experience, but the experience of the market and our global client base to bear and to support them is becoming really critical.  

Thanks so much, Stuart. I want to flip that question now, actually, if we can. You know, we're seeing what clients are struggling with, but where are we seeing examples of success or best practice? How is prioritising product integrity adding value to the business?  

Yeah, good, really good question. And I think where we're seeing, the focus on zero tolerance from our client base is where we're seeing them have the right success. I, and it's back to that trust bank again, it's back to consumers recognizing that as a brand that is doing the best that can to really drive that confidence and that product integrity.  and I think that there's probably several areas where our clients are strengthening their, the kind of position on it. I think number one is independent verification of what they're saying.  and that's been around for a little while, but, you know, we're seeing it extend to other areas and not just things like greenhouse gas emission statements or carbon neutrality or net zero, or whatever the buzzword of that particular business and sector is at the time. But actually then saying, don't just take our word for it. Here is, you know, an independent verification of what we're saying to demonstrate to you, the consumer, the end user, our clients, that we're actually doing what we say we're doing. So that, that's, that's the first thing. I think the second thing we're seeing is listening to data and using it to make intelligent business decisions, trusting in what it's telling you is where we're beginning to see some competitive advantage from some of our clients, the ones who are actually getting ahead of the data lake mess and actually working with LRQA or similar companies to say, Come on, help me interpret this. Help me with a plan. What's it telling me and what should I be doing about it? And then trusting in that is a big leap forward. And that’s a change over the last probably 12 to 18 months where people are really now making driven decisions that are data intelligently led rather than just using the data and analysing it. 18 months down the line saying, we could have predicted this, you know, a year ago, and we did, but we didn't do anything about it. So I think businesses are now beginning to see that they need to actually trust in it and act on it and, and not wait for something to happen that they could have actually prevented. And then I think, you know, the third thing for me is, getting ahead off the problem  and actually being quite a proactive with your client base with your consumers on sharing what you're trying to do and where your challenges are on. We're seeing a little bit more of that in the market. I think the consumers become more intelligent, more aware over the last few years on the brands and the clients that are actually sharing the journey and where they're doing well, but also where they're where they're doing well. They're still having to catch up and where they're working with external advisors like LRQA to plug the gap, to fill the hole, to accelerate the solution,  and be very open and transparent is helping them actually with that product integrity journey where, you know, their consumers understand  This is a continual improvement programme. There is no end to it. There is no destination. The destination is, you know, this will continue to move because things will continue to be challenging. Your supply chain will continue to evolve. The products and services that you provide will continue to evolve. The opportunities for theft, for fraud, for cyber hacking, for fraud. You know, non-ethical issues to actually jump into to your processes and your supply chain will continue to evolve. So, you know, you're on a bus that's continually moving here. It doesn't get to a stop and you can get off and pat yourself on the back for a great job. It's all the time.  

Stuart, every time we do one of these episodes, you always come up with fantastic metaphors, anecdotes, phrases. It's absolutely wonderful, so we're on the bus now, which is great. But actually my new favourite is this concept of trust banking. I think that's a wonderful way to think about what we're talking on here today. So my next question, actually, we've looked at the relationship between businesses who prioritise, you know,  and what value that can generate with consumer trust. What about if we look in a different direction and we look at investors? Does a company who shows complete vigilance around product integrity make themselves more attractive as a business to investors as well?  

Absolutely. And we have actually spoken to a number of investment houses and private equity organisations around their expectations from an organisation. And it's not just around the organisations that they want to acquire, but it's also where investments are made, you know, because these investments are made by investment trusts, by banks, by building societies, by investment houses, that all have customers themselves. And we're seeing an increase in the expectations around ethical investment. And then understanding and knowing what they're investing in and an actual fact that then drives commercial behaviours that can really help a company in terms of being that lower risk type of investment, you know, that are more attractive capital funds in terms of repayment demands and expectations that there are wider funds that are willing to invest than perhaps the normal stream, when they see some of these green  and environmentally and ethically sustainable opportunities. And we're also seeing that then slowly but surely drive that competitive advantage because, you know, the companies are less risk averse, are therefore, more likely to get that support and that support can help them make financial decisions quicker, because there's less risk involved in it. So the, the investor knows, for example, that the, the, the company, and certainly we've got examples of this was the case, Some of our global clients have already done the right due diligence, have already thought correctly about what a potential acquisition or divestment can do to their business. And therefore, when they do request that financial support, then there's less homework to be done. There's less of a decision to be made because they're already confident in the board's decision and recommendations, so they can act more decisively. They can be quicker to market, they can be quicker to support opportunities, and that can give them that competitive advantage in, you know, a world that's moving so quickly now that you wake up in the morning and something's transformed. 

Excellent. So, Stuart, come on, give us the answer, the ultimate solution to these challenges we've been discussing today. What solutions does LRQA offer to support clients? Have you got any examples of tools that are out there that gives that global visibility, depending on where a company's sourcing from? 

Yeah, sure. I mean, look, we've got our own tool in terms of EiQ, which is a phenomenal, data-driven platform and risk intelligence platform that helps you make the right decisions around where are your risks, what are the interventions you should take, which ones you should you prioritise, and more importantly, it's dynamic. I mean, it's based on millions and millions of data points that are uploaded and updated in real time. So if something does change overnight, then you could be made aware of it. But it's part of a programme and it's part of a solution. And I think, you know, I could compartmentalise it into products and services. But where we're seeing the biggest moment where we're seeing the biggest solution driven approach with clients is where they're actually embracing someone like LRQA as a trusted partner,  and actually becoming more engaged in sharing the journey that they're on, you know, everyone's got a business plan, whether it be one year, three years, five years, and actually sharing some of that business plan, the detail that sits under, you know, underpinning what you tell the public. And actually, this is the business journey we're going on. This is our priority. This is how we're trying to do it. How can you support us on that? You get a much better partnership rather than someone that's providing you with products and services in a contractual relationship. So I would say there are a lot of tools out there and, you know, I mentioned EiQ as one example of such a tool, but the technical expertise that a company like LRQA can bring is a tool, the global reach, the global knowledge, and the ability to bring that knowledge to your table, outside of not just your company, but potentially outside of your sector so that you can learn from other sectors and how they're addressing and targeting some of these problems with laser solutions is also important, and therefore, that's a tool that LRQA  and other companies can bring to the table. And I would say the final one, all of that is how we bring it together in terms of that kind of global account management perspective, where we make sure that we are engaging with the right people in your business at the right level with the right technical expertise from within LRQA to have those grown up conversations. So we've moved away from providing a product to meet a service requirement or to meet an RFP or a tender into, you know, being that kind of hand in hand partner that can help you on your journey into the future. The biggest and most successful relationships that we have is where both sides are embracing that and actually trusting each other to make the leap. And that includes us. We have to put our trust in that brand and in that partner and in that client that we believe in their journey and their journey also links into our values, and we've got to make sure that we do that because our people are critical to their success. They’re part of LRQA because they believe in our culture and they believe in our values and therefore the true partnerships that we can get when, when the stars collide around that is where we're seeing some great things.  

You're totally right. It really is a two way relationship. Finally, Stuart, I love that we try to provide thought leadership to our listeners and our clients as we all navigate the era of Assurance 4. 0 together. This is a global movement and there's been such a lot to take in today as just one of the client challenges that we're exploring here. So on the topic of product integrity, what would be your lasting message that you want to leave our listeners with? 

Well, that's a great question, Holly. I don't be afraid to ask for help. You're never going to be as good as you think you are. And there will always be gaps and opportunities for unscrupulous people to take advantage of. So be prepared to listen, to ask a lot of questions and to work with a partner like LRQA to support you on that journey. 

Wonderful final words, Stuart. Thank you so much. You genuinely offer such a breadth of perspective across sectors and regions, thanks to your relentless focus on our clients. And also thank you to our listeners. Thank you once again for tuning in and giving us your time. Please do visit our homepage on Spotify to stay up to date with new releases. And to find out more about LRQA services, please visit lrqa.com. Stuart, thank you so much.

It's been a pleasure.