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Only a quarter of respondents say their enterprises monitor business partners at least quarterly: anti-corruption research


April 28, 2016   by Canadian Underwriter


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Just 27% of the 330 respondents taking part in a recent online survey monitor business partners at least quarterly or more often, note findings from the 2016 Anti-Corruption Survey Report, released this week.

RiskFindings in the report from Dow Jones Risk and Compliance, in association with MetricStream Research, are based on responses to a survey conducted in March. Featuring the insights of compliance professionals on a range of anti-corruption aspects, the report analyzes anti-corruption monitoring and management across 330 companies in North America (91), Western Europe (65), Asia-Pacific (108) and other countries (66).

Citing the influence of anti-corruption regulation and enforcement, “we’re seeing large-scale, anti-corruption investigations and record fines targeted not only at companies, but also at individual executives,” Joel Lange, managing director of Dow Jones Risk and Compliance, says in a statement issued by MetricStream. “In this heightened regulatory climate, a company’s success, reputation and very survival are largely dependent on the effectiveness of their anti-corruption programs,” Lange cautions.

The proportion of respondents that never monitor or use some other approach (i.e., risk-based) increased in 2016, states the report.

Government sanctions rose 12% from 2015, where 89% of respondents cite it as the most likely trigger to relationship reviews. Asked what factors trigger such a review, 89% of respondents say government sanctions, 76% say potential negative media coverage, and 75% say reputation issues.

With regard to the positive aspects of anti-corruption regulations, the report states that “cost savings, improved business relationship with partners and more fairness in the marketplace are also mentioned by at least 50% of respondents.”

Other key findings from the report include the following:

  • 60% of respondents say senior-level executives and board members, and 66% of M&A targets, require due diligence;
  • 27% note that banning all facilitation payments is unrealistic compared to 32% who say it is realistic;
  • 65% report delaying or stopping work with a business partner as a result of concerns over anti-corruption regulation violations; and
  • Iran, China, Russia, Iraq and the Ukraine were listed as the countries where business endeavours are most likely to be interrupted because of corruption concerns.

Report findings indicate the proportion of respondents indicating their companies called off business endeavours as a result of difficulties getting information to assess corruption risk decreased in 2016, reversing a 2015 increase. “The incidence of delaying or calling off endeavours due to unclear anti-corruption regulations remains near 50%,” the report states.

Some good news may be that clear evidence exists of improvement in the business environment, MetricStream notes in the statement.

In all, 26% of respondents say business was lost to an unethical competitor, down from 28% in 2015 and 33% in 2014. “The proportion of respondents reporting that their companies ever lost business to unethical competitors continues to trend downward, from 33% in 2014 to 26% in 2016,” the report points out.

In addition, “the survey found that having anti-corruption programs in place for six to 10-plus years continues to trend upward, nearly reaching 60%,” states the report. “Most of the programs in place have codes of conduct and internal training,” it notes, adding that other components include such things as auditing compliance activities, alerting to risks and risk-ranking of partners.

Despite the positives, report findings reveal that while “more companies are getting serious about anti-corruption monitoring, many continue to rely on manual tools, spreadsheets and siloed applications that often don’t provide the required level of efficiency and risk visibility,” French Caldwell, chief evangelist at MetricStream, suggests in the statement.

Noting that risks and regulations today are more complex and intertwined than ever before, “companies that manage their anti-corruption risks and compliance requirements in an integrated and automated manner, as part of their larger enterprise risk management and GRC (governance, risk and compliance) framework, are better-positioned to preserve their integrity, protect their brands and reputations, and perform exceptionally,” Caldwell contends.

On the plus side, the report shows almost 40% of respondents predict increases in their companies’ anti-corruption-related technology spending in the near future. “Almost 60% feel their companies will take some action toward evaluating and/or acquiring commercial anti-corruption compliance software,” it adds.