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Governance Authority
Category: Third-Party and Supply Chain

Modern Slavery Risk

Also known as: Modern slavery supply chain risk, Forced labour risk
Simply put

Modern slavery risk is the possibility that a business is connected to serious labour exploitation, such as forced labour, debt bondage, forced marriage, or slavery-like practices, through its own operations or, more commonly, through its supply chains and value chains. It is both a risk to the people affected and a risk to the organisation, which may face legal, financial, and reputational consequences. The level of risk is generally influenced by factors such as economic disparity, weak legal protections, and unstable political environments in the regions and sectors a business relies on.

Formal definition

Modern slavery risk refers to the exposure of an entity to involvement in, or connection to, modern slavery practices, typically encompassing forced labour, debt bondage, forced marriage, and slavery or slavery-like conditions, across its operations, procurement activities, and extended supply or value chains. It is generally assessed along a spectrum in which lesser labour abuses may serve as warning indicators of elevated risk, and is understood as a dual-natured risk to affected individuals and to the organisation itself. Practitioners typically manage this risk through processes to identify, assess, and mitigate exposure at each stage of procurement and supply chain engagement, with heightened attention to higher-risk geographies, sectors, and supplier characteristics. The specific legal obligations attaching to modern slavery risk, such as statutory reporting or due diligence duties, vary by jurisdiction, sector, and entity type, and this entry does not describe the requirements of any particular regime; it is educational and not legal or compliance advice.

Why it matters

Modern slavery risk is distinctive because it is dual-natured: it is first a serious risk to the people who may be subjected to forced labour, debt bondage, forced marriage, or slavery-like conditions, and secondarily a risk to the organisation connected to those practices. As industry sources note, modern slavery is a clear risk to people and a growing concern globally, and the two dimensions cannot be separated, an entity's exposure typically arises precisely because real individuals are being exploited somewhere in its operations or supply chains.

For the organisation, the exposure is most often indirect, arising through procurement activities and extended supply or value chains rather than direct employment. This makes the risk harder to see and harder to control, because it may sit several tiers removed from the entity and concentrate in higher-risk geographies and sectors. Various factors contribute to elevated risk, including economic disparities, lack of education, unstable political environments, and weak legal protections in the regions and sectors a business relies on. Because modern slavery exists on a spectrum, lesser labour abuses can serve as early warning indicators of more serious exploitation.

The organisational consequences may include legal, financial, and reputational effects, and the specific legal obligations that attach to modern slavery risk, such as statutory reporting or due diligence duties, vary considerably by jurisdiction, sector, and entity type. This entry does not describe the requirements of any particular regime and is educational rather than legal or compliance advice; determining what an entity must do requires reference to the laws applicable to it and appropriate professional judgment.

Who it's relevant to

Procurement and supply chain leaders
Because modern slavery risk most commonly arises through supply and value chains rather than direct operations, procurement functions are typically central to identifying, assessing, and mitigating exposure at each stage of supplier engagement. This includes prioritising attention on higher-risk geographies, sectors, and supplier characteristics, and treating lesser labour abuses as warning indicators of more serious exploitation.
Chief risk and compliance officers
These functions generally frame modern slavery as a manageable enterprise risk that must be integrated into broader risk assessment and due diligence processes. Compliance leaders in particular need to understand which statutory reporting or due diligence duties apply to their entity, noting that these obligations vary by jurisdiction, sector, and entity type and that this entry does not substitute for legal advice.
Boards and audit or risk committees
Boards and their committees typically hold an oversight role rather than operational responsibility, satisfying themselves that management has adequate processes to identify and mitigate modern slavery exposure and to meet any applicable reporting obligations. Given the reputational, legal, and financial consequences at stake, directors generally seek assurance over the design and effectiveness of these processes.
Investors and assurance providers
Modern slavery is increasingly treated as an investment and stewardship concern, prompting investors to consider how investee companies identify and manage the risk across their value chains. Assurance functions, whether internal audit or external providers, may be engaged to independently review the adequacy of an entity's modern slavery risk processes.

Inside Modern Slavery Risk

Forced Labour and Servitude
The exploitation of individuals through coercion, threat, or deception to perform work against their will, typically forming a core category of modern slavery risk that organisations must consider across their own operations and supply chains.
Human Trafficking
The recruitment, transportation, or harbouring of people through force, fraud, or coercion for the purpose of exploitation; a distinct but related component often addressed within the same risk assessments and disclosure regimes.
Supply Chain Exposure
The risk that modern slavery practices occur within an organisation's direct and indirect supply chains, particularly in lower tiers with limited visibility. Assessing this exposure generally involves mapping suppliers, geographies, and sectors with elevated inherent risk.
Statutory Reporting Obligations
Certain jurisdictions impose legal requirements on qualifying entities to publish statements describing steps taken to address modern slavery. Whether an obligation applies depends on the applicable statute, the entity's size or turnover, and its jurisdiction of operation.
Due Diligence and Risk Assessment
The ongoing process of identifying, assessing, and prioritising modern slavery risk, distinguishing inherent risk from residual risk after controls such as supplier screening, audits, and remediation mechanisms are applied.
Governance and Accountability
The allocation of oversight and operational responsibility. The board or a designated committee typically holds oversight responsibility, while management owns the day-to-day design and operation of controls, with assurance functions providing independent review where appropriate.

Common questions

Answers to the questions practitioners most commonly ask about Modern Slavery Risk.

Does publishing a modern slavery statement mean an organisation is compliant and its supply chain is slavery-free?
No. In jurisdictions that impose modern slavery reporting obligations, the typical legal requirement is generally one of transparency, preparing, approving, and publishing a statement describing the steps taken (or, in some regimes, stating that no steps were taken). Meeting the disclosure requirement is not the same as certifying that a supply chain is free of forced labour. Reporting frameworks generally do not mandate a specific outcome or guarantee that risks have been eliminated; they require the entity to describe its approach. An organisation can satisfy its filing obligation while significant residual risk remains. Assessing actual compliance depends on the specific statute, jurisdiction, and facts, and this entry is educational rather than legal advice.
Is modern slavery risk only a concern for the compliance or legal function?
Not typically. Modern slavery risk generally spans governance, risk, and compliance disciplines and often involves multiple functions. Compliance may own monitoring against applicable reporting obligations and codes, while procurement and operational management, often described as the first line, generally own the day-to-day activities that create or mitigate exposure in the supply chain and workforce. Enterprise risk management typically integrates it into broader risk assessment, and internal audit or another assurance function may provide independent assurance over control effectiveness. The board or a designated committee generally holds oversight responsibility, including approving the statement where a framework requires board approval. Which function owns a given activity depends on the organisation's structure and operating model.
How can an organisation assess where modern slavery risk is greatest across its operations and supply chain?
Organisations generally begin with a risk assessment that considers factors commonly associated with elevated exposure, such as sector, geography, workforce type, and the presence of lower-tier suppliers, subcontracted or migrant labour, and outsourced functions. Many approaches distinguish inherent risk (before controls) from residual risk (after controls are applied) to help prioritise. Mapping the supply chain beyond first-tier suppliers is often a practical challenge, and the depth achievable depends on available data, leverage over suppliers, and resources. This is a matter of professional judgment rather than a prescribed formula, and appropriate methods vary by entity type and jurisdiction.
What controls do organisations commonly use to mitigate modern slavery risk?
Common measures described in guidance and voluntary frameworks include supplier codes of conduct, contractual clauses, due diligence and screening processes, supplier questionnaires, audits or site assessments, worker grievance mechanisms, and training for procurement and relevant staff. It is generally useful to distinguish control design (whether a control is capable of addressing the risk) from operating effectiveness (whether it functions as intended over time). No single control set is universally required; the appropriate mix depends on the organisation's risk profile, sector, and the requirements or expectations that apply to it. Some measures may be legal requirements in certain jurisdictions while others are voluntary good practice.
What is the board's role in relation to modern slavery risk, as distinct from management's?
The board or a designated committee generally holds an oversight role, satisfying itself that appropriate processes exist to identify, assess, and respond to the risk, and, where a reporting framework requires it, reviewing and approving the modern slavery statement. Management, typically operating as the first and second lines, generally owns the operational activities: conducting risk assessments, implementing and running controls, engaging suppliers, and preparing disclosures for board consideration. The board is generally not expected to perform operational due diligence itself. The precise allocation depends on the entity's governance structure and any applicable framework, and specific approval requirements vary by jurisdiction.
How can an organisation obtain assurance that its modern slavery controls are working?
Assurance over modern slavery controls generally follows the same logic as other control areas: distinguishing whether controls are designed appropriately from whether they operate effectively over the relevant period. Internal audit or another independent assurance function may review the design and operating effectiveness of due diligence, supplier monitoring, and grievance processes, and report findings to the audit or risk committee. Some organisations also use external verification or third-party audits, though the reliability of supplier audits is itself a recognised limitation, particularly in lower supply-chain tiers. The scope, frequency, and form of assurance are matters of professional judgment and depend on the organisation's risk profile and resources.

Common misconceptions

Publishing a modern slavery statement means an organisation has eliminated modern slavery from its operations and supply chains.
Where a reporting obligation applies, a statement generally describes the steps taken rather than certifying the absence of modern slavery. Residual risk typically remains, particularly in lower supply chain tiers with limited visibility, and disclosure is not a guarantee of a risk-free supply chain.
Managing modern slavery risk is solely a compliance function responsibility.
Modern slavery risk spans governance, risk, and compliance disciplines. Management typically owns operational controls and due diligence, the compliance function may monitor adherence to applicable obligations, and the board or a committee generally holds oversight. Accountability sits across these functions rather than in one alone.
Modern slavery reporting requirements apply uniformly to all organisations everywhere.
Reporting obligations vary by jurisdiction, sector, and entity type, and are typically triggered by thresholds such as turnover or size. Some organisations act on a voluntary or best-practice basis rather than under a binding legal requirement, so applicability depends on the specific facts and applicable law.

Best practices

Map your supply chain beyond direct suppliers where feasible, prioritising higher-risk geographies and sectors, and distinguish inherent risk from residual risk after existing controls are considered.
Confirm whether any statutory reporting obligation applies to your entity based on its jurisdiction, size, and turnover, and seek qualified advice where applicability is uncertain rather than assuming a requirement does or does not apply.
Clarify accountability by allocating board or committee oversight, management ownership of operational controls, and, where appropriate, independent assurance review, avoiding overlap or gaps between these roles.
Assess both the design and the operating effectiveness of controls such as supplier screening, contractual clauses, audits, and grievance or remediation mechanisms, rather than assuming a documented policy is functioning in practice.
Treat modern slavery due diligence as an ongoing process, refreshing risk assessments as the supplier base, geographies, and external conditions change rather than as a one-time exercise.
Ensure any published statement accurately describes the steps taken and remaining limitations, avoiding language that overstates assurance or implies the absence of residual risk.