It has been an unprecedented year for corporate risk, with firms simultaneously facing threats from all angles, including increasingly complex supply chains and the impact of covid-19 measures, says the risk consultancy Kroll, which has brought out a Global Fraud and Risk Report.
Zoë Newman, Managing Director, Forensic Investigations and Intelligence at Kroll, said: “While it is good news that so many organisations are bolstering defences with proactive measures such as data analytics and that bribery and corruption risk is on the boardroom agenda, the findings from this year’s report leave us with an important question: Why are bribery and corruption threats persisting and still having such a big impact? Poor record-keeping or the inability to adequately monitor frontline teams and regional offices are typical vulnerabilities that are often overlooked. Then there’s the human factor: An organisation can have the best possible compliance program in place on paper, but if the human elements of the chain aren’t well managed, educated or equipped to act, non-compliance or illicit behaviour will continue to prevail and go undetected.”
Among the findings of the report, a majority, 57pc of respondents at companies with a turnover of more than $15 billion (bn) reported a very significant impact of illicit activity, such as fraud, corruption and money laundering on their organisation, with a further quarter (25pc) describing the impact as somewhat significant. Near three quarters (72pc) said bribery and corruption issues were being given sufficient board-level attention and investment. However, despite these defences being employed, most, 82pc overall still felt corruption and illicit activity were having a significant impact on their organisation.
Nearly half (46pc) of respondents citing lack of visibility over third parties as the number one threat relating to bribery and corruption risk. Weaknesses in internal record-keeping was second on the list of top concerns (31pc) followed by employees’ actions at 23pc.
Howard Cooper, Managing Director, Forensic Investigations and Intelligence at Kroll, said that businesses need to see the wood and the trees; in other words, they need to have a tight grasp of their internal data as well as the ability to zoom out. “This is only possible if a business is able to look outward and close the gap between internal policies and external developments. If a business can pass on some of its wisdom to one of its long-term suppliers through training or ‘meeting the team’ sessions, for example, that supplier will become less vulnerable, making it a stronger link in the chain. Company culture is a key component of any successful strategy to curb bribery and corruption risk.”
