Compliance Week Issues 2020 Anti-Bribery & Corruption Benchmarking Report

On April 30, Compliance Week issued the 2020 Anti-Bribery & Corruption Benchmarking Report.  The risk solutions firm Kroll produced the Report (available via this link) based on survey responses from more than 150 compliance and risk professionals.  Overall, the Report covers four categories of anti-bribery and corruption (ABC) related concerns: third-party risk, enhanced due diligence, third-party training, and emerging technologies.

Key findings of the Report include the following:

• ABC Program Effectiveness: Only 56 percent of responses rated their companies’ ABC programs as highly effective (22 percent) or effective (34 percent), while 29 percent rated their programs moderately effective, 8 percent minimally effective, and 7 percent non-effective.
• Adequacy of Resources: A majority of respondents viewed “adequate resources” as a critical factor in ABC program success. 85 percent of those who rated their programs highly effective or effective said they had adequate resources.  In contrast, 67 percent of those who rated their programs moderately effective or lower said that they lacked sufficient resources.
• Changes in Bribery and Corruption Risks: When asked whether they anticipated that bribery and corruption risks to their companies would increase, decrease, or stay the same over the next two to three years,
  • Increase: 48 percent of those rating their programs moderately effective or lower, and 29 percent of those rating their programs highly effective or effective, said risks would increase.
  • Decrease: 17 percent of those rating their programs highly effective or effective, and only 3 percent of those rating their programs moderately effective or lower, said risks would decrease.
  • Stay the Same: 46 percent of those rating their programs highly effective or effective, and 39 percent of those rating their programs moderately effective or lower, said risks would stay the same.
• Third Parties in High-Risk Jurisdictions: An equal percentage (33 percent) of those rating their programs highly effective or effective and those rating their programs moderately effective or lower reported that they had third parties operating in high-risk jurisdictions internationally. 50 percent of those rating their programs highly effective or effective, and 40 percent of those rating their programs moderately effective or lower, reported that they did not.
• C-Suite Awareness of Potential Third-Party Risk: 61 percent of respondents said that their C-Suite was aware of the potential third-party risk that their enterprises faced prior to engaging with them. Another 23 percent said that their C-Suite was sometimes aware of that potential risk, while 13 percent said their C-Suite was not aware.
• Enhanced Due Diligence of Third Parties: The Report stated that “many companies, according to the survey results, still have mediocre ABC programs is particularly concerning when it comes to enhanced due diligence of third parties.”  More than half (56 percent) of those rating their programs highly effective or effective, and 43 percent of those rating their programs moderately effective or lower, said less than 25 percent of their third parties undergo enhanced due diligence (EDD).  More troubling, 5 percent of those rating their programs highly effective or effective, and 14 percent of those rating their programs moderately effective or lower, said that none of their third parties undergo EDD.
• EDD Challenges: 38 percent of respondents stated that their biggest challenge regarding EDD was lack of knowledge, while 34 percent rated cost and 15 percent rated delivery time as the biggest challenge.
• ABC Training for Third Parties: A surprising 46 percent of all respondents, and 37 percent of respondents with third parties in high-risk areas, said that they never train their third parties on ABC.  44 percent of those rating their programs highly effective or effective, and 39 percent of those rating their programs moderately effective or lower, said they trained their third parties annually.  19 percent of those rating their programs highly effective or effective, and 15 percent of those rating their programs moderately effective or lower, said they trained their third parties less frequently (every 2 or 3-5 years).
• ABC Training Methods for Third Parties: Methods that respondents said their companies were using for such training included “an anti-bribery statement in the Code of Conduct (55 percent), text within the onboarding questionnaire (39 percent), certifications in contract materials (35 percent), and online or Web-based training (25 percent).” As for followup on such trainings, 45 percent of respondents said that they used attestations, 37 percent questionnaires, 32 percent auditing, and 26 percent in-person meetings.  7 percent said that they did not do followup.
• Emerging Technologies: When asked what emerging technologies their companies currently user or plan to use to enhance their anti-bribery programs, 60 percent said that they did not plan to use artificial intelligence (AI), blockchain, or machine learning.  26 percent said they use or plan to use AI, 8 percent blockchain, and 18 percent machine learning.  In addition, 65 percent of respondents said that their third-party due diligence vendors do not use AI or any other sort of machine learning when conducting their checks.

Note:  ABC compliance officers should use this Report, as it recommended, to benchmark their own ABC programs and identify areas for review and improvement.  The survey results indicate that far too many corporate ABC programs have deficiencies that range from significant to severe, especially with regard to effectively managing third-party risk.  Even if the economic damage that companies are enduring from coronavirus is substantial and likely to last for one or more years, companies must still take stock of their current-state programs and make sure that those programs have a defensible amount of resources devoted to critical ABC compliance needs.