corruption and corporate risk
TRANSCRIPT
GOOD. SMART. BUSINESS. PROFIT.TM
Corruption and Corporate Risk: How to Integrate Anti-Corruption Practices into Existing Business Operations
February 4, 2015
Chelsie Chmela
Events Manager
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SPEAKING TODAY
Craig Moss
COO, CREATe.org
Leslie BentonVice President, CREATe.org
Craig Moss, Chief Operating [email protected]
Leslie Benton, Vice [email protected]
Center for Responsible Enterprise and Trade(CREATe.org)
Corruption and Corporate Risk: How to Integrate Anti-Corruption Practices into Existing Business Operations
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Introductions and Agenda
• How to identify, assess and manage corruption-related risks
• Ways to expand existing risk programs to address corruption risks
• Assessing the likelihood and consequences of corruption
• Processes that companies should have in place to prevent and detect corruption
Craig MossCOOCREATe.org
Leslie BentonVice PresidentCREATe.org
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Center for Responsible Enterprise And Trade
Mission Global NGO dedicated to making leading practices in intellectual property (IP) protection and anti-corruption achievable for all companies
Services CREATe Leading Practices: online assessments, evaluations, e-Learning, advisory – available in Chinese, English, Portuguese and Spanish
Global Reach Working with companies in a range of industries in China, Brazil, India, Europe, Mexico, Japan, Singapore and the US
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Corruption – Significant Risk Today
Where Bribery Happens
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Anti-Bribery Laws
• Two laws with broad extraterritorial reach:
• U.S. Foreign Corrupt Practices Act
• UK Bribery Act
• Other Laws
• Brazil’s Clean Company Law
• China’s Criminal Code
• Effect of Anti-Corruption Treaties:
• Most countries have anti-bribery laws on the books
• International Cooperation
• Mutual Legal Assistance
• Extradition
Brazil
U.K.
Common Features of Anti-Bribery Laws
• Extra-territoriality
• Criminal and civil offenses
• Covers bribery to foreign government officials (and may cover
domestic/commercial bribery)
• Payment through third parties prohibited
• Corporate liability
• Individual liability
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Enforcement Trends• Continued aggressive enforcement
• More prosecutions of individuals
• International cooperation
• Enforcement in multiple jurisdictions
• Scrutiny of compliance programs
Enterprise Risk Management and Anti-Corruption
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Broadening Risk Management
• Financial stability• Quality control• Health & safety• Environment• Labor
Focus Today: Trend:Holistic Approach
• Supply chain• Compliance and
corruption • IP protection
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CREATe.org White Paper:Addressing Corruption Risk Through ERM
Integrating anti-corruption into overall risk management
• Practical guidance• Templates and
checklists
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Enterprise Risk Management
IDENTIFY1. What risks
does the company face?
ASSESS2. How serious
are those risks?
MANAGE3. What steps
should a company take to manage risks?
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1. Identify Risks
Identify Risks:Strategic, Operational,Compliance, Financial,
Reputational
Establish context
Action:- In each of the 5 categories above, think about what
type of corruption risk you may face in your company- Define your relevant risks
• A Resource Guide to the U.S. Foreign Corrupt Practices Act
• U.K. Bribery Act 2010 Guidance
• Good Practice Guidance on Internal Controls, Ethics, and Compliance
• Partnering Against Corruption – Principles for Countering Bribery
• Fighting Corruption in the Supply Chain: A guide for Customers and Suppliers
• and others
Anti-Corruption Compliance Guidelines
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Identifying and Assessing Specific Corruption Risks
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Geography Industry & Sector
Organizational & Operations
TransactionalThird Parties
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2. Assess Risks
Severity of Occurrence
Probability of Occurrence
Actions:• Rate the risks• Use rankings such as high, medium, low
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Risk Probability and Severity
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3. Manage Risks
Communication
Risk Response
Monitoring & Review
Actions:• Assess and improve internal systems to prevent corruption
inside the company • Take steps to manage anti-corruption in the supply chain
including due diligence
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How Do Companies Manage Corruption Risks?
70% of companies do not have financial controls specifically designed to detect corruption or do not consistently use them if they do have such controls
80% do not have specific procedures to direct employees to follow policies
65% do not conduct a formal anti-corruption risk assessment before entering a new market or business partner relationship
62% reported that they do not provide anti-corruption training to employees
86% do not monitor the anti-corruption compliance of their supply chain and business partners
Supplementing Legal with a Holistic Management System Approach
Legal-Only Approach
• Contract-driven
• Compliance is a silo in the legal department
• Typically reactive
• Seek legal remedy if problems are discovered
Management System Approach
• Builds awareness throughout the company
• Communicates clear expectations
• Preventative, proactive
• Builds on management systems used for other business operations
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What Systems Should be in Place?
Cross-Functional Compliance Team
Scope & Quality of Risk Assessment
Management of Supply Chain
Training & Capacity Building
Monitoring & Measurement
Corrective Actions & Improvements
Policies, Procedures & Records
Effective corruption prevention involves 7 categories:
Five Levels of Maturity for Each Category
5 Mature system covering all anti-corruption issues and focused on continual improvement
4 Systems are well developed and implemented
3 Systems approach; inconsistent implementation and monitoring
2 Limited, reactive systems
1 Little or no awareness or repeatable processes
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3-step service
• Online Assessment
• Expert Evaluation• Improvement Plan
-200+pg Guides for Improving Programs
CREATe LeadingPractices
eLearning Advisory
15-minute courses
• Anti-Corruption• Introduction to IP• Trade Secret
Protection
Tailored assistance
• Workshops• Implementation
guidance• Webinars
Thank [email protected] [email protected]
For more information about CREATe Leading Practices,
please contact us at [email protected]
Wednesday, February 11, 2015Doing Business in Mexico: Pact for Mexico and
Emerging Compliance Implications
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