Half of $15 billion turnover companies suffer impact of corruption
More than half of the world’s largest corporates are being hit hard by corruption and illicit activity. A new report has highlighted proactive data analytics as one way companies are looking to mitigate the risk.
According to a survey of 1,336 senior decision-makers for risk strategy, 57% of respondents from firms of a turnover greater than $15 billion said they had endured “very significant” impacts of corruption and illicit activity. The research from Kroll found that a further 25% described the impact as somewhat significant. Firms with an annual revenue of between $10 billion and $15 billion also noted this was a mounting problem, with 48% saying their organisation had been very significantly impacted and 44% reporting the impact was somewhat significant.
The survey highlighted that corporates were placing an increased focus on proactive measures to manage bribery and corruption risk, including 82% implementing enterprise-wide risk assessments, and 86% using proactive data analytics. Despite these defences being employed, though, an overall figure of 82% still felt corruption and illicit activity were having a significant impact on their organisation.
Zoe Newman, a Managing Director for Forensic Investigations and Intelligence at Kroll, noted, “It has been an unprecedented year for corporate risk, with firms simultaneously facing threats from all angles, including increasingly complex supply chains and the impact of Covid-19 measures. While it is good news that so many organisations are bolstering defences with proactive measures such as data analytics and that bribery and corruption risk is on the boardroom agenda, the findings from this year’s report leave us with an important question: Why are bribery and corruption threats persisting and still having such a big impact?”
According to Newman, there are many different fronts on which companies are having to fight against corruption. Poor record-keeping or the inability to adequately monitor frontline teams and regional offices have been typical vulnerabilities that are often overlooked, while even with the best possible compliance program in place on paper, without educating staff or equipped to act, non-compliance or illicit behaviour often flies under the radar.
Kroll’s research found that global organisations themselves felt most vulnerable to both internal and external threats. Around 46% of respondents cited a lack of visibility over third parties as the number one threat relating to bribery and corruption risk, but in agreement with Newman’s hypothesis, 31% also cited weaknesses in internal record-keeping as the next biggest threat, ahead of 23% being concerned by employees’ actions.
UK controls
By contrast, respondents in the UK were some of the most confident when it came to their bribery and corruption risk strategies. Eight-in-ten respondents said their organisation’s ABC controls were sufficient. Meanwhile, a majority of 84% of UK respondents said bribery and corruption risk is given sufficient board level attention in their organisation, while only 24% ranked internal record keeping as their top internal threat. They were also more likely to use data analytics to proactively detect bribery and corruption risk, at 91% compared to 86% globally.
UK respondents were more concerned by external threats, however. With developed economies like the UK increasingly dependent on complex international supply chains, though consistently show concerns over third-party risk exposure, 49% of UK respondents ranked lack of visibility over third parties as their biggest bribery and corruption threat – suggesting more action needs to be taken in this area.
