Global business expansion and increasing number of third-party relationships at the root of bribery and corruption risks in 2016
New York, NY (March 9, 2016) – Kroll, the global leader in risk mitigation and response solutions, today released its 2016 Anti-Bribery and Corruption Report (ABC Report), produced in conjunction with the Ethisphere Institute. As reflected in the ABC Report, 40 percent of all compliance officers surveyed believe their company’s bribery and corruption risks will increase in 2016. These senior-level ethics and compliance professionals cited two primary factors as contributing to these increased risks: global expansion and an ever-increasing number of third-party business relationships.
One in four of those surveyed expressed no confidence in the ability of their company’s current controls to detect third-party violations of anti-corruption laws. This percentage – 25 percent – is an alarmingly high figure, given the increasing number of third-party relationships involved in business activities, as well as the large percentage of enforcement actions rooted in payments facilitated through third parties.
On a positive note, the degree of Board and senior executive engagement regarding anti-bribery and corruption matters is increasing, with over half of respondents stating that their Board of Directors plays an active role in program development and 48 percent saying the same of their CEO. The ABC Report data reveals that companies with engaged leadership teams are more likely to believe their bribery and corruption risks will remain the same or decrease in the coming year, and they display more confidence in their ability to handle risk.
“Companies are clearly better prepared to address risk proactively when senior leadership engages,” said Erica Salmon Byrne, EVP of Governance and Compliance at Ethisphere. “It is heartening to see these numbers, which we believe reflect an understanding of the importance of this critical risk.”
M&A activity in 2015 reached a record US$3.8 trillion. Yet over a quarter of survey respondents stated they do not have anti-corruption measures or programs in place for M&A or other corporate transaction targets.
“With global M&A – and in particular cross-border transactions – positioned to have another record year in 2016, it’s concerning that compliance professionals do not yet have a full seat at the table early enough in the transaction process to be able to exert meaningful influence in these critical business decisions,” said Lee Kirschbaum, President of Kroll Compliance.
The ABC Report also highlights that only one-third of respondents indicated that they are more concerned with personal liability than in prior years.
“After the release of the so-called ‘Yates Memo’ by the U.S. Department of Justice in September 2015, which expressed a renewed focus on holding individual corporate officers accountable, it is surprising that we are not seeing a higher level of executive-level concern in this area,” said Joe Spinelli, Senior Managing Director at Kroll.
The ABC Report also includes the following findings:
- 54 percent of respondents felt their business was not appropriately prepared to comply with global bribery and corruption risks
- 47 percent felt they did not have enough resources to support their organization’s anti-corruption efforts
- Only 19 percent felt highly confident in their controls to detect third-party violations of anti-corruption laws
- 47 percent described their company’s leadership as highly engaged in anti-bribery and corruption efforts
- 86 percent identified the Chief Financial Officer and 66 percent identified the Chief Compliance Officer as the internal stakeholders primarily responsible for driving program development
- 48 percent of respondents do not conduct third-party audits, and only 34 percent say they are providing training to third parties.
The 2016 ABC Report was publicly released today at Ethisphere’s Global Ethics Summit in New York, NY.
The full 2016 ABC Report can be accessed here: http://info.kroll.com/2016-abc-report.
Kroll is the leading global provider of risk solutions. For more than 40 years, Kroll has helped clients make confident risk management decisions about people, assets, operations and security through a wide range of investigations, cybersecurity, due diligence and compliance, physical and operational security and data and information management services. Headquartered in New York with more than 50 offices across nearly 30 countries, Kroll has a multidisciplinary team of over 2,000 employees and serves a global clientele of law firms, financial institutions, corporations, nonprofit institutions, government agencies and individuals. For more information visit www.kroll.com.
About the Ethisphere Institute
The Ethisphere® Institute is the global leader in defining and advancing the standards of ethical business practices that fuel corporate character, marketplace trust and business success. Ethisphere has deep expertise in measuring and defining core ethics standards using data-driven insights that help companies enhance corporate character. Ethisphere honors superior achievement through its World’s Most Ethical Companies® recognition program, provides a community of industry experts with the Business Ethics Leadership Alliance (BELA) and showcases trends and best practices in ethics with the publication of Ethisphere magazine. More information about Ethisphere can be found at: http://ethisphere.com.