Asia-Pacific Fraud Survey 2015
Fraud and corruption – driving away talent?
Our Asia-Pacific (APAC) Fraud Survey 2015 reveals a compelling new reason for executives and boards to revisit their fraud, bribery and corruption risk mitigation strategies.
To date, the incentives to get compliance right have entered on minimising financial losses, reducing the management time required to investigate and remediate issues, and preventing the reputational damage caused by corruption.
But with the vast majority of our respondents rating ethical practices as important, and nearly 80% saying they would be unwilling to work for organisations involved in bribery and corruption, there is a new imperative to manage fraud, bribery and corruption risks effectively.
In this environment, ensuring that companies have high ethical standards and use technology proactively to prevent and detect fraud, bribery and corruption will be key to both retain talent and make compliance programs more sustainable.
Compliance becomes increasingly demanding
Respondents report business success is being challenged by increasing regulation and slower than expected economic growth. Half say stronger local anti-corruption enforcement is a major challenge. These expanding regulatory demands are requiring companies operating in APAC to look at increasing numbers of financial transactions and relationships in greater depth. And they need to do so with limited compliance resources.
Respondents unwilling to work for companies involved in bribery and corruption
8 out of 10 respondents say they would be unwilling to work for companies involved in bribery and corruption.
This surprisingly strong link between ethics and talent retention introduces a major new benefit to fraud, bribery and corruption risk management, especially for organisations with people at the core of the growth strategies.
Work needed to make Anti-Bribery and Corruption (ABAC) policies relevant and effective
In response to increasing regulation and enhanced local enforcement, APAC companies have strengthened their internal controls. But some policies and systems are not working as well as they should – and many companies are struggling to make compliance sustainable.
Having a whistleblower hotline that employees trust and are prepared to use without fear of retaliation sends a clear message that the company will not tolerate unethical behaviour. However, our survey reveals that 45% of companies in APAC have yet to implement a hotline.
More due diligence required to manage third-party risks
The survey found that more than half (56%) of the respondents think third parties are a risk to their business in relation to ABAC compliance.
But 72% of respondents are confident that their organisation is effectively managing the fraud, bribery and corruption risks associated with these third parties.
This confidence is misplaced given the legal and reputational exposure it creates, as evidenced by the continuing focus by regulators on the part third parties often play in bribery and corruption scandals. Companies entering into a business relationship with a third party should conduct as much due diligence as an acquisition and should also extend their ethical framework to monitoring third-party behaviour.
Cyber threats – underestimated?
Fundamentally, because a cyber attack may affect business operations, financial statements and legal exposure, its reputation is on the line.
But only 55% of respondents say they are given data security training related to cyber threat techniques and attacks.
Additionally, 47% of respondents are worried that their organisation will be at an increasing risk of cyber attacks over the next few years.