Conflicts of interest now rivals bribery and corruption as top concern
PORTLAND, Ore., October 27, 2016 -- Leading ethics and compliance software and services company NAVEX Global® today announced findings from its annual survey of compliance professionals. In contrast to 2015, respondents said they are more concerned about conflicts of interest among their third-party business partners (43 percent), than bribery and corruption (40 percent) or fraud (33 percent). Concern about cyber security, a new category in this year’s survey, rose near the top at 39 percent. Cyber security is a particular concern among respondents in the finance and healthcare sectors.
“It is perhaps not surprising that conflicts of interest has overtaken the perennial front runner, bribery and corruption, as top concern," said report author Randy Stephens, J.D., Vice President, Advisory Services, NAVEX Global. “Perhaps this indicates compliance leaders are beginning to get their arms around bribery and corruption, and are now discovering conflicts an increasingly salient issue. But it could also be an early sign that there is a new problem in the global business ecosystem.”
The rise in conflicts of interest sensitivity may be due in part to the expectation among respondents that they will be using more third parties in the coming year. Thirty percent indicated they anticipate their organizations will increase third-party engagements in 2017. More than half (58 percent) said their third party management processes do a good job keeping them compliant with laws and regulations. However, less than half (43 percent) said they are doing sufficient screening of all third parties, and 35 only percent indicated they are successful at conducting deeper dives where needed. Similarly, one-third of respondents reported they are successful at documenting all processes and protocols.
“Program sophistication and maturity are demonstrably important,” said Stephens. “Recently, the U.S. Securities and Exchange Commission declined to pursue charges against Harris Corporation related to Foreign Corrupt Practices Act violations having to do with the actions of a subsidiary party, because the company had self-reported and could demonstrate a strong internal compliance and FCPA due diligence program.”
The top concern for respondents regarding implementation of their program was the complexity of due diligence, followed by training of third parties and information management. This in turn is a strong argument for the merits of automation. Mature programs are six times more likely to report good overall performance of their third-party due diligence than those with reactive or basic programs. Those with automated systems are twice as likely to report success. A large percentage of respondents (60 percent) who use automated systems are more likely to screen all third parties. This percentage increased from 40 percent in 2015.
To download NAVEX Global's 2016 Ethics & Compliance Third Party Risk Management Benchmark Report, please click here. To learn more about NAVEX Global's SaaS solution, RiskRate™ Enterprise Due Diligence please click here.
About NAVEX Global's Benchmark Reports
NAVEX Global's trusted hotline, training, policy management and third party risk management benchmark reports help ethics and compliance professionals measure their programs against peers and industry standards to make better decisions and increase ethics and compliance program effectiveness.
About NAVEX Global
NAVEX Global's comprehensive suite of ethics and compliance software, content and services helps organizations protect their people, reputation and bottom line. Trusted by 95 of the FORTUNE 100 and more than 12,500 clients, its solutions are informed by the largest ethics and compliance community in the world. For more information, visit www.navexglobal.com.
Learn more about NAVEX Global (www.navexglobal.com) online: @NAVEXGlobal(https://twitter.com/navexglobal), LinkedIn (https://www.linkedin.com/company/navex-global), Facebook(https://www.facebook.com/NavexGlobal) and SlideShare (http://www.slideshare.net/NAVEXGlobal).