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Changing regulation, increased enforcement and the adoption of new technologies are changing the risk landscapes that organizations must face. Our survey respondents see fraud and corruption among the greatest risks to their business and our results show there remains a significant level of unethical conduct.
Our survey found that although there were some improvements in certain countries, fraud and corruption have not declined globally in the last two years. Although fraud and corruption remain more prevalent in emerging markets, a significant minority of respondents reported widespread corruption in developed markets.
It appears that our younger respondents are more likely to justify fraud or corruption to meet financial targets or help a business survive an economic downturn. With increased pressure for individuals and businesses to succeed, the problems of fraud and corruption do not appear to be going away.
The last two years have seen an unprecedented level of fines from governments, with dramatically increased penalties being imposed by Brazil, the Netherlands, the UK and Switzerland, among others. We continue to see more governments across the world introducing and enforcing anti-corruption laws. However, our global results show that occurrences of fraud and corruption have not reduced since 2014. From our experience there is often a lag between the introduction of laws and real change being made by organizations.
The majority of respondents stated that management has introduced anti-corruption policies, whistleblowing hotlines and statements of ethics. However, we do not see a corresponding decrease in unethical conduct and business failures. Organizations should focus their efforts on improving the effectiveness of these programs by assessing the corporate culture, controls and governance from an integrity perspective, leveraging new technologies to provide better data insights.
It is our respondents’ perception that the benefits of acting with integrity include improved customer and public perception and successful business performance, while the cost of non-compliance with laws continues to increase. So why do we still see unethical conduct?
One reason may be that it is not clear who within an organization is responsible for integrity. Fewer than one in four of our respondents believe it is primarily an individual’s responsibility. Businesses should set a clear expectation of their employees and third parties as to their responsibility for integrity.
With the introduction of digital compliance tools such as predictive analytics and real-time risk alerts, forensic data analytics (FDA) can significantly improve the effectiveness and efficiency of monitoring and reporting, strengthening the second line of defense.
Compliance has a role in the first line of defense. It is important that compliance professionals embed themselves within the operational and strategic parts of business, sharing insight and promoting a culture of integrity.