BY Fraser Tennant
Third-party violations of anti-bribery and corruption (ABC) laws are top of the list of perceived risks for compliance professionals in 2018, according to a new report by Kroll and the Ethisphere Institute.
The ‘2018 Anti-Bribery and Corruption Benchmarking’ report reveals compliance teams are having to deal with the convergence of regulatory mandates, critical reputational factors and data security issues as they try to protect their organisations from substantial financial and reputational harm, as well as regulatory and legal exposure.
Furthermore, 93 percent of 448 study respondents said ABC risks will remain the same or worsen in 2018. Those who expect a greater level of ABC risks attribute the rise to increased enforcement of existing regulations, followed closely by new regulations.
“The report brightly illuminates the challenges facing today’s compliance experts, including the likelihood that third-party risks will grow in relevance and impact,” said Erica Salmon Byrne, executive vice president and executive director of the business ethics leadership alliance at Ethisphere. “We are encouraged, however, that partnerships across organisations continue to grow as company leaders assign greater priority to the adoption of best-in-class ABC programmes that protect not only individual organisations, but also the integrity of the global business ecosystem.”
Reputational and integrity concerns remain the number-one reason why a third-party fails to meet an organisation’s standards, with organisations stating they were “concerned” or “very concerned” with beneficial ownership risks associated with their third parties.
“The stakes are high and so is the risk level, which is likely causing some sleepless nights for the average compliance professional,” said Steven J. Bock, global head of operations with Kroll’s compliance practice. “In today’s hypersensitive business environment where a company’s hard-earned reputation can be easily lost through a lapse of judgment by a third-party, the job of a conscientious compliance professional has never been tougher or more central to the success or failure of a business.”
On a positive note, 36 percent of respondents indicated that their organisation dedicated more resources to ABC issues in 2017 than in 2016. Executive leadership support also remains strong, as 92 percent of all survey respondents said that their leadership team is “highly engaged” or “somewhat engaged” in their ABC efforts.
Mr Bock concluded: “Ongoing monitoring that includes a regular refresh of the underlying third-party data emerged among the report findings as a key strategy for maintaining the effectiveness of ABC programmes overall, and especially for keeping up with potential ownership changes.”