Anti-bribery and corruption risks to increase further in 2021
The vast majority of risk professionals expect anti-bribery and corruption risks to stay the same or increase in the coming year, according to a new report. Cyber security worries seem to be driving the pessimism, with almost half of respondents suggesting the world’s increased dependence on digital working had made firms vulnerable to hackers.
The Covid-19 pandemic caused serious challenges to businesses around the world, with many companies not even being able to stay open for the majority of the year amid the lockdown. Opening up digital avenues for staff to work from home was a popular remedy for this – however, it was not without risks of its own. In order to roll out digital working as quickly as possible, around 46% of SMEs relaxed some areas of their cybersecurity in order to allow staff to work remotely – presenting a golden opportunity for internet fraudsters.
The threats this poses are not only related to the immediate costs of data breaches or data protection fines, though. A new report from professional services firm Kroll has found that many risk professionals attribute the rushed IT roll outs of 2020 as being behind a spike in corruption around the world. A large minority of 46% of those polled said that cyber security and data breaches had been a key driver of increasing risks in the anti-bribery and corruption (ABC) field.
In comparison, only half the number of respondents said that the impact of remote working had enabled corruption within firms, with decentralised management allowing for individuals to more easily evade direct culpability for their actions. At the same time, financial pressure on a company – something which might more regularly be a core motive for corruption – was only cited by 15% as a key factor.
Meanwhile, 90% of risk professionals told Kroll that they expected ABC risks would increase or stay the same in 2021, compared to the last year. This is largely in anticipation of changing regulatory standards in response to the rapidly shifting ABC environment.
Enforcement agencies in many regions have been impacted by the pandemic, with resource and movement restrictions impeding investigations and prosecutions, suggesting to Kroll that “it is likely that enforcement activity will return to a similar or more ambitious pace than before.” On top of this, according to the researchers, “regulators have expressed eagerness on prosecuting pandemic-related fraud,” potentially adding to the regulatory risk firms will face.
In this context, Europe is the continent in which the largest number of respondents expects a spike in ABC risk, with 54% of risk experts suggesting an increase is incoming. Meanwhile, no experts there suggested there might be a decrease – in contrast to North America, Latin America and Asia Pacific, where at least 10% said risk might fall.
Michael Watt and John Arvanitis, of Kroll’s compliance risk and diligence team, commented, “In Europe, we can also expect continued regulatory attention on how businesses took advantage of government aid, and how that aid was obtained and deployed. Companies can conduct look backs of their organisation’s activities during the pandemic to ensure they were not unknowingly exposed to additional corruption risks.”
