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Emerging markets have experienced significant change and burgeoning development over the last five years, becoming economic powerhouses and stimulating global growth. However, changing regulations and increased enforcement are altering the risk landscape. Organizations must face these challenges head-on: while emerging markets offer immense promise and abundant opportunities, the ever-present risks of fraud, bribery and corruption present potential obstacles to growth.
There is also broad consensus that the risk of bribery and corruption is higher in emerging rather than developed markets. Over 43% of survey respondents from these markets feel that the macroeconomic environment, changing regulation, and fraud and corruption pose the greatest risks to their business; significantly higher than their peers in developed markets.
In trying times, management needs to boost the ethical agenda, redefine compliance programs and adopt a technology-centric approach driven by data analytics to minimize integrity lapses.
Fraud and corruption risks in emerging markets present a challenge for global multinationals operating in these regions. They may primarily be constrained by the extraterritorial reach of regulations and legislation of their home countries. In recent years, however, governments in emerging markets have begun to introduce more robust enforcement of strengthened anti- corruption laws. Many companies are faced with the stark choice: divest from certain markets, or operate in an environment where the normal rules of fair competition are undermined.
In this report, we consider how companies can operate competitively in markets where corruption is widespread and in which corrupt practices may be perceived as a common way of gaining a competitive advantage.
EY India and Emerging Markets Leader
Forensic & Integrity Services