Excerpted from a September 4, 2019 article by Megan Zwiebel in Anti-Corruption Report
In part three of a series of articles concerning risk assessment programs, Anti-Corruption Report focused on where companies should be looking for risk and how they can rank those risks.
According to firm partner Kathleen Hamann, an internationally recognized authority in the field of white collar enforcement and compliance matters, one important aspect of the risk assessment is analyzing the company’s finances, “even if it is just to sit down with the finance people and ask them if they have seen anything weird.”
Kate added, “I know of one company that discovered a major bribery scheme by simply asking questions about some unusual spending. The company was going through a budgeting process when it noticed that shipping and logistics costs in one office had skyrocketed. It cut the budget and the shipping manager responded angrily that he would make his budget every year if the marketing people would stop making him pay for things out of their budget. It turned out that the expenses being booked through shipping and logistics were bribes.”
In determining where to look for areas of risk, Kate recommends looking beyond “actual, concrete risks to find areas of perceived risk.” She notes, “When assessing risk, a company should not just look at the risk of misconduct but also at the risk of the perception of misconduct that could lead to an investigation. Investigations are punitive, expensive, disrupt business operations, hurt morale, damage reputations, and depending on who is conducting the investigation, they can hang over a company’s head for years.”
Once areas of “possible heightened risk” are identified, Kate notes that “the challenge becomes uncovering the risks themselves.” To do that, Kate recommends asking key questions about potential risk areas, such as:
- Is this what it purports to be?
- What assurances are there that this is what it purports to be?
- Is what it purports to be legal and ethical?
- Is this in the normal course of business?
- Are there things that need follow-up or additional mitigation?
The complete article on where to look for risk and risk ranking can be found in the September 4, 2019 issue of Anti-Corruption Report.