What are the main challenges around ensuring bribery and corruption does not impact your business through your third parties and counterparties? Also, what steps can you take to understand these hidden third party risk factors, no matter where they may lie?
- Companies say that tackling bribery and corruption in their global operations is one of their biggest challenges.
- Thomson Reuters has detailed the steps required to implement a successful anti-corruption compliance program.
- A third party risk assessment should involve constant monitoring and input, as a company’s risk profile can change at any point in time.
With a surprising 92 percent of respondents to our recent True Cost of Financial Crime survey saying that they viewed bribery and corruption as a common practice, it’s clear that alarm bells should be ringing for regulators and legislators across the globe.
According to the report, an estimated US$309 billion is lost in turnover to bribery and corruption each year. That’s bigger than the $239 billion lost to fraud and $267 billion for money laundering.
In contrast, it is encouraging that 94 percent believe that tackling bribery and corruption throughout their global operations is important, and one of the two areas that companies find the most challenging.
However, it is an area that most companies have said they find challenging to prevent in their global operations. This makes it essential that they identify ways to get a clearer picture of their risks.
In a separate third party risk survey conducted in late 2017, we asked which top three regulations had the most impact on a company’s operations.
In North America and Europe, anti-bribery and corruption legislation was at the top, while it was second on the list in Asia Pacific.
The good, the bad and the ugly
Robert Barrington, Executive Director of Transparency International UK, said there was often a mis-match between corporate and public views of the financial crime problem.
In an article for the True Cost of Financial Crime report, he said: “The key point is that companies think of themselves as victims; the public think of them as perpetrators.
The usual defense of the ‘rogue employee’ somewhat neglects the concept of corporate accountability and responsibility.
Is it a coincidence that more of these rogue employees are apparently found in companies with poor governance, weak compliance, a culture of misaligned incentives and over-aggressive sales targets?”
In order to fight corruption and bribery in business, it is crucial to have the support from the leadership right down to the far reaches of its upstream and downstream associations.
Third party risk assessment
Thomson Reuters has detailed the steps required to implement a successful anti-corruption compliance program.
One part of a sound anti-corruption program is a thorough risk assessment of the third party, involving constant monitoring and input, as a company’s risk profile can change at any point in time.
This could be due to many factors, ranging from operational difficulties and financial troubles through to associations with “bad actors.”
Some of the points to consider during onboarding are the third party’s geographic location, the business sector it operates in, their business partners and the type of transactions they undertake. Also, when conducting a refresh: has anything changed?
One way or another?
From recent reports, it seems that organizations can be too complacent when it comes to putting safeguards in place to avoid being part of the problem.
On the other hand, they also realize the extent of the challenge it brings and are keen to find solutions.
Thomson Reuters: Answers On Financial and Risk
It is safe to say that the problem of corruption is not going away any time soon.
Partnering with an organization, such as Thomson Reuters, can provide you with a clearer picture of the risks facing your business and deliver insight towards what you need to focus on most.
Our risk intelligence helps you make the best possible decisions, given what is known, at any point in time.
- See how innovation in compliance is helping professionals work more efficiently by accessing our on-demand webinar: Transforming the compliance world with new technologies.