How Are Your Business Habits Changing?
During the past few years, there has continued to be a shift in the amount of attention companies are putting towards corruption concerns and anti-corruption programs. This is evident in the recent survey of 311 compliance professionals, conducted on behalf of Dow Jones Risk & Compliance.
According to the survey, and as reported by the WSJ, 71% of respondents have delayed or stopped activities with business partners over concerns about breaking anti-corruption regulations, with 54% calling off projects due to confusion around the anti-corruption regulations.
Survey results indicate that the Foreign Corrupt Practices Act (FCPA) and UK Bribery Act have each had major impacts on anti-corruption policies enforced within companies, with 61% saying the Acts have influenced their decision to do business in particular locations.
Though, while the regulations have impacted company policy to prevent unethical business, 45% are still seeing a loss due to unethical competition. Almost three-quarters of respondents see a need for a more level playing field, something they see as the most important benefit of regulation.
Shockingly, only 20% said they monitor business partners at least quarterly, usually triggered by government sanctions, reputation issues and negative news. Although that percentage seems low, 84% of companies “risk-rank” countries, with 85% of those using Transparency International’s index in the process.
The survey found that 56% of respondents remain “extremely or very confident” in their company’s due diligence process (a key best practice when addressing anti-corruption and third-party risk). The main factors hindering confidence include difficulty assessing information and evaluating its credibility. Cost, time and access to commercial information still are the main factors limiting due diligence.
The most likely targets of due diligence efforts are merger and acquisition prospects. It was also discovered that only 41% of respondents update their due diligence procedures regularly (at least every two years). Because many companies find the process taxing on both time and finances, the ability to automate the process can be a huge asset to companies managing growing numbers of third-parties and partners.
NAVEX Global’s approach to this issue enables companies to identify, assess, mitigate and monitor the risks presented by relationships with vendors, suppliers, agents, distributors and other third parties by automating much of the due diligence process.