Fighting Global Corruption Risk
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Fighting global corruption by building sustainable corruption risk assessment process and developing a proactive risk management plan proportional to your organization’s risk exposure. Presented by Eric Pesik at Asia Risk Professionals Congress at the Carlton Hotel, in Singapore, March 2012
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Fighting Global Corruption Risk
- 1. Fighting Global Corruption Presented by Eric Pesik Asia Risk Professionals Congress Carlton Hotel, Singapore, 2012
- 2. Fighting Global Corruption Fighting global corruption by building sustainable corruption risk assessment process and developing a proactive risk management plan proportional to your organization’s risk exposure
- 3. Agenda: 1. New Anti-Corruption Laws 2. Risk Assessment Process 3. Risk Management Plan 4. Responsibility of Risk Officers
- 4. Agenda: 1. New Anti-Corruption Laws 2. Risk Assessment Process 3. Risk Management Plan 4. Responsibility of Risk Officers
- 6. US Foreign Corrupt Practice Act (FCPA)
- 8. China Anti-Bribery Amendments
- 9. Commercial Bribery
- 12. Global Reach
- 14. Agenda: 1. New Anti-Corruption Laws 2. Risk Assessment Process 3. Risk Management Plan 4. Responsibility of Risk Officers
- 15. FCPA Fines in Millions Siemens (Germany) $800 KBR/Halliburton (USA) $579 BAE (UK) $400 Only US Snamprogetti/ENI (Holland/Italy) $365 company Technip (France) $338 JGC Corporation (Japan) $219 Daimler AG (Germany) $185 Jeffrey Tessler (UK) $149 Alcatel-Lucent (France) $137 Panalpina (Switzerland) $82
- 16. 58 Average age of persons currently in US prisons for FCPA convictions Aaron G. Murphey, Foreign Corrupt Practices Act: A Practical Resource for Managers and Executives, 2001 John Wiley & Sons, Inc.
- 17. Value of All Losses (Occupational Frauds by Category) Financial 68% Statement Fraud Asset 21% Misappropriation Corruption 11% May exceed 100% because cases involve multiple categories. Association of Certified Fraud Examiners, Report to the Nations 2010 Global Fraud Study
- 18. Frequency of All Losses (Occupational Frauds by Category) Financial 5% Statement Fraud Asset 86% Misappropriation Corruption 33% May exceed 100% because cases involve multiple categories. Association of Certified Fraud Examiners, Report to the Nations 2010 Global Fraud Study
- 20. Risk by Geography Transparency International 2010 Corruption Perceptions Index
- 21. Risk by Industry Each industry is different
- 23. Intermediaries increase risk Risk by Intermediaries
- 24. Risk by Company
- 26. Corruption Risk
- 28. Risk Inventory Likelihood & Impact Scale Personal Commitment Form
- 29. Likelihood Rating Scale Almost Unlikely Likely Certain Not more More than One every Frequency: than every 3 once per 1-3 years years year Probability: 10% - 30% 30% - 60% > 60%
- 30. Impact/Severity Rating Scale Minor Moderate Major Financial < $1 Million $1-5 Million > $5 Million Impact: Govt. / Official Pub Awareness Pub Concern Reputational Investigation Impact: Regional State / National International Internal Shareholders Public Markets Little or no Business Unit Company Impact or Function Operations Asking for Doubting Canceling Operational Reassurances Business Business Impact: Individuals Individuals Criminal Disciplined Terminated Sanctions Employee Employee Loss of Morale Turnover Mgrs/Execs
- 31. Risk Inventory 1. Political Contributions/Activities 2. Charitable and Industrial Contributions 3. Company Memberships 4. Expense Accounts 5. Consultants and Professional Service Providers 6. Leadership 7. Company Culture 8. Accurate Books and Records 9. Expense Accounts 10.Acquisitions 11.Business Combinations 12.Third Party Representatives and Agents 13.Procurement 14.Gifts, Gratuities, and Entertainment 15.Export, Import, Customs
- 32. Cost-benefit analysis Likelihood & Cost of Magnitude Avoidance
- 34. Low Likelihood High Likelihood High Impact High Impact High Impact High Likelihood Low Likelihood Low Impact Low Likelihood High Likelihood Low Impact Low Impact
- 35. Low Likelihood High Likelihood High Impact High Impact High Impact Add Cost to Avoid or Mitigate High Likelihood Low Likelihood Low Impact Low Likelihood High Likelihood Low Impact Low Impact
- 36. Agenda: 1. New Anti-Corruption Laws 2. Risk Assessment Process 3. Risk Management Plan 4. Responsibility of Risk Officers
- 37. Risk Inventory Likelihood & Impact Scale Personal Commitment Form
- 38. Low Likelihood High Likelihood High Impact High Impact High Impact High Likelihood Low Likelihood Low Impact Low Likelihood High Likelihood Low Impact Low Impact
- 39. Low Likelihood High Likelihood High Impact High Impact High Impact High Likelihood Low Likelihood Low Impact Low Likelihood High Likelihood Low Impact Low Impact
- 40. Low Likelihood High Likelihood High Impact High Impact High Impact High Likelihood Low Likelihood Low Impact Low Likelihood High Likelihood Low Impact Low Impact
- 41. Low Likelihood High Likelihood High Impact High Impact High Impact High Likelihood Low Likelihood Low Impact Low Likelihood High Likelihood Low Impact Low Impact
- 42. Low Likelihood High Likelihood High Impact High Impact High Impact High Likelihood Low Likelihood Low Impact Low Likelihood High Likelihood Low Impact Low Impact
- 43. Risk Inventory Likelihood & Impact Scale Personal Commitment Form
- 44. Risk Inventory Likelihood & Impact Scale Risk Management Plan 1. 2. 3. Personal 4. Commitment 5. Form 6. 7. 8. 9. 10.
- 45. Example: Anonymous Tip Line
- 46. Tip 40.2% Management Review 15.4% Internal Audit 13.9% By Accident 8.3% Account Reconciliation 6.1% Document Examination 5.2% External Audit 4.6% Surveillance/Monitoring 2.6% Notified by Police 1.8% Confession IT Controls 1.0% 0.8% Fraud Detection Association of Certified Fraud Examiners, Report to the Nations 2010 Global Fraud Study
- 47. Tip With Hotline 47.1% Tip 40.2% Management Review 15.4% Internal Audit 13.9% By Accident 8.3% Account Reconciliation 6.1% Document Examination 5.2% External Audit 4.6% Surveillance/Monitoring 2.6% Notified by Police 1.8% Confession IT Controls 1.0% Fraud Detection 0.8% Association of Certified Fraud Examiners, Report to the Nations 2010 Global Fraud Study
- 48. Tip Without Hotline 33.8% Tip 40.2% Management Review 15.4% Internal Audit 13.9% By Accident 8.3% Account Reconciliation 6.1% Document Examination 5.2% External Audit 4.6% Surveillance/Monitoring 2.6% Notified by Police 1.8% Confession IT Controls 1.0% 0.8% Fraud Detection Association of Certified Fraud Examiners, Report to the Nations 2010 Global Fraud Study
- 49. 13.3% Tip Without Hotline 33.8% Tip 40.2% Management Review 15.4% Internal Audit 13.9% By Accident 8.3% Account Reconciliation 6.1% Document Examination 5.2% External Audit 4.6% Surveillance/Monitoring 2.6% Notified by Police 1.8% Confession IT Controls 1.0% 0.8% Fraud Detection Association of Certified Fraud Examiners, Report to the Nations 2010 Global Fraud Study
- 51. Agenda: 1. New Anti-Corruption Laws 2. Risk Assessment Process 3. Risk Management Plan 4. Responsibility of Risk Officers
- 52. Risk Inventory Likelihood & Impact Scale Risk Management Plan 1. 2. 3. Personal 4. Commitment 5. Form 6. 7. 8. 9. 10.
- 55. Risk Management Plan Low Like o High Impliht od ac High Impact 1. High Likeliho 2. od High Impact 3. 4. 5. 6. 7. 8. 9. 10. Low Likelihoo d High Likeliho od Low Impact Low Likelih Low Impactood High Likeliho od Low Impact
- 56. Official Tone From the Top
- 60. Questions?
- 61. All images are from Microsoft Office Online, used with permission from Microsoft, except for the following images licensed under Flickr Creative Commons Attribution License Businessman behind web By internets_dairy Meeting nieuwe leden flickr.com/photos/16339684@N00/2784622731/ flickr.com/photos/kripptic/1954828422/ Parlament by Convergència Democràtica de Catalunya Blue Telephone by By UggBoy/UggGirl flickr.com/photos/convergenciademocratica/6197445493/ flickr.com/photos/uggboy/5345135964/ Signpost by Andrea_44 flickr.com/photos/8431398@N04/2680944871/ AdjustTie by Dplanet flickr.com/photos/dplanet/94441582/ Businessman by Kripptic No Pictures by Dplanet flickr.com/photos/kripptic/1954828422/ flickr.com/photos/dplanet/94442623/