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World's biggest corporates are hit hard by crime

World's biggest corporates are hit hard by crime
 Photo by Kindel Media from Pexels

The world’s biggest corporates are suffering from significant levels of corruption and other illicit activity, according to a new report by global business services company Kroll.

In March this year, Kroll surveyed 1,336 senior decision-makers, including chief compliance officers, chief finance officers and chief executives, for its Global Fraud and Risk Report 2021.

The survey covered 17 countries and regions, including the UK, France, Australia, Russia, India and the Middle East. More than half (60 per cent) of the organisations surveyed had annual revenues of $250m (£182m) or more, and 34 per cent had annual revenues of more than $1bn.

The responses revealed that 57 per cent of companies surveyed with turnover of more than $15bn were being “very significantly” affected by illicit activity such as fraud, corruption and money laundering. And nearly half (48 per cent) of companies with an annual revenue of between $10bn-$15bn also reported that their company had been affected similarly by these issues.

However, the respondents also indicated that problems are being addressed. The survey highlighted that big businesses are taking corrective action, strengthening their focus on proactive measures to manage bribery and corruption risk, including enterprise-wide risk assessments (82 per cent) and the use of data analytics (86 per cent). 

And the issues are under scrutiny at the very top of these organisations. Nearly three-quarters (72 per cent) of respondents said that bribery and corruption were being given sufficient board-level attention and investment. 

But there are reports of lingering problems, as despite the defences put in place, 82 per cent overall said that they still felt corruption and illicit activity were having a significant impact on their organisation. 

Causes and potential solutions

As corruption continues to prevail, despite much time and investment directed at resolving the issue, this raises questions about potential causes. Coronavirus may be a factor, but it is not the only one.

Zoe Newman, managing director and global co-head of the financial investigations practice at Kroll, says: “It has been an unprecedented year for corporate risk, with firms simultaneously facing threats from all angles, including increasingly complex supply chains and the impact of Covid-19 measures.

“While it is good news that so many organisations are bolstering defences with proactive measures such as data analytics and that bribery and corruption risk is on the boardroom agenda, the findings from this year’s report leave us with an important question: why are bribery and corruption threats persisting and still having such a big impact?”  

The report’s findings showed that global organisations were feeling vulnerable to both internal and external threats, with 46 per cent of respondents citing lack of visibility over third parties as the number one threat relating to bribery and corruption risk. Weaknesses in internal record-keeping was second on the list of top concerns (31 per cent) followed by employees’ actions at 23 per cent. 

Newman says: “Poor record-keeping or the inability to adequately monitor frontline teams and regional offices are typical vulnerabilities that are often overlooked. Then there’s the human factor: an organisation can have the best possible compliance programme in place on paper, but if the human elements of the chain aren’t well managed, educated or equipped to act, non-compliance or illicit behaviour will continue to prevail and go undetected.”