Any financial institution must do a corruption risk assessment. It reviews the chances of corruption from within the company. Corruption means committing certain evil acts, like receiving bribes. An assessment discovers where corruption can occur.
Corruption harms the financial company. It may cause them to lose confidence in the company. They may indeed transfer their business to other firms. An assessment saves the company from corruption. This demonstrates to clients and regulators that a company is serious about corruption.
This article explains a deep corruption risk assessment exercise. It elaborates on the steps to identify areas with high-risk exposure. This article would help in the development of a plan to manage corruption risk.
Let’s learn how following these steps will keep your company safe with integrity, hold trust with customers, and protect the company.
Importance of Corruption Risk Assessment
Every financial institution should conduct a corruption risk assessment. It gives the organization awareness of where corruption could occur. An anti-corruption risk assessment protects a company from undesired acts. It ensures that customers’ money and information are safe. This assessment will show regulators and customers that a company is serious about the risks of corruption.
Setting up your Corruption Risk Assessment team
A company-wide special team needs to be set up to conduct the assessment. The team should comprise employees from various divisions in an organization. They must have adequate knowledge of compliance and corruption risks. The corruption risk assessment team works towards fixing a risk and collecting information to prepare a report. The top managers should support this team while doing their crucial work to find corruption risks.
The scope of your assessment
The scope of the corruption risk assessment has to be determined. It creates a scope, kind of like one would make a checklist of the things one wants to look at. It will help the team to focus on their work, pointing out what matters to delve into more deeply. Things of importance are transactions, departments, locations, and contracts. The scope of the corruption risk assessment clearly defines those appropriate places in which one should look for risks.
Identify High-Risk Areas, Departments, And Processes
The team will identify the top areas most at risk for the company in anti-bribery and corruption risk assessment. They research areas that deal directly with the government or those that get special permissions.
In its 2023 Global Anti-Bribery and Corruption survey, it observed that more than 45% of companies had issues related to bribery and corruption with departments. It was significantly higher compared with past years. Departments such as accounting or procurement are high risk. The team will review processes like approvals, bids, or expense claims, for instance.
Developing Risk Indicators And Assessment Criteria
A good team takes the process seriously by laying down appropriate tools for assessing corruption risks. This involves developing a checklist of risks of corruption with clear signs that point to the existence of a possible risk.
Some of the elements in the checklist would include unusual expenses, conflict of interest, or lack of control. Criteria rate likelihood and impact on a 1-to-5 scale. With good indicators and criteria, the anti-corruption risk assessment will be able to pinpoint problems accurately.
Conduct Interviews And Collect Evidence
The assessment team speaks with the managers and staff working within the high-risk areas. This ensures that information is collected as accurately as possible. Interview answers, together with documents, give evidence for the corruption risk assessment checklist.
Emails are collected, and visitors are contacted. Photos may bring out assets corresponding to the records. The collection of evidence is firm, which means the anti-corruption risk assessment will be proper and detailed enough to protect the company’s interests.
Analyzing Findings And Prioritizing Risks
The team will evaluate the results from the anti-corruption risk assessment checklist to identify trends and associated risks. The criteria offered will go a long way in determining the intensity of each risk. Significant risks may leave a company in lousy hurt with potential losses of about even 5% of the yearly revenues, according to the Association of Certified Fraud Examiners in their Report to the Nations, 2022.
Bonus: If the institutions do not carry out regular corruption risk assessments or have them updated, legal and financial consequences can include heavy fines and reputational damage. Being proactive will ensure that your institution runs safely to work toward the creation of a culture of integrity and accountability.
Creating A Mitigation Plan And Ongoing Monitoring
The team designs a program to complete the corruption risk assessment. In this program, for every top risk, it has been mentioned that controls are there to make it safer. The risk mitigation plan is approved by senior management. It then becomes imperative to have monitoring by the compliance team in order to see that all the planned controls work. The monitoring is continuous, so by performing audits every year, one should be sure that risks remain at a low level.
