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Corruption and Corporate Risk: How to Integrate Anti-Corruption Practices into Existing Business Operations

February 4, 2015

Chelsie Chmela

Events Manager

Chelsie.chmela@ethisphere.com

847.293.8806

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HOST

QUESTIONS

RECORDING Included in your registration: • Event recording and deck: Following the live event,

Ethisphere will provide you with access to the event recording, PowerPoint presentations and other supporting materials.

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SPEAKING TODAY

Craig Moss

COO, CREATe.org

Leslie BentonVice President, CREATe.org

Craig Moss, Chief Operating Officercmoss@CREATe.org

Leslie Benton, Vice Presidentlbenton@CREATe.org

Center for Responsible Enterprise and Trade(CREATe.org)

Corruption and Corporate Risk: How to Integrate Anti-Corruption Practices into Existing Business Operations

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Introductions and Agenda

• How to identify, assess and manage corruption-related risks

• Ways to expand existing risk programs to address corruption risks

• Assessing the likelihood and consequences of corruption

• Processes that companies should  have  in place to prevent and detect corruption

Craig MossCOOCREATe.org

Leslie BentonVice PresidentCREATe.org

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Center for Responsible Enterprise And Trade

Mission Global NGO dedicated to making leading practices in intellectual property (IP) protection and anti-corruption achievable for all companies

Services CREATe Leading Practices: online assessments, evaluations, e-Learning, advisory – available in Chinese, English, Portuguese and Spanish

Global Reach Working with companies in a range of industries in China, Brazil, India, Europe, Mexico, Japan, Singapore and the US

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Corruption – Significant Risk Today

Where Bribery Happens

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Anti-Bribery Laws

• Two laws with broad extraterritorial reach:

• U.S. Foreign Corrupt Practices Act

• UK Bribery Act

• Other Laws

• Brazil’s Clean Company Law

• China’s Criminal Code

• Effect of Anti-Corruption Treaties:

• Most countries have anti-bribery laws on the books

• International Cooperation

• Mutual Legal Assistance

• Extradition

Brazil

U.K.

Common Features of Anti-Bribery Laws

• Extra-territoriality

• Criminal and civil offenses

• Covers bribery to foreign government officials (and may cover

domestic/commercial bribery)

• Payment through third parties prohibited

• Corporate liability

• Individual liability

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Enforcement Trends• Continued aggressive enforcement

• More prosecutions of individuals

• International cooperation

• Enforcement in multiple jurisdictions

• Scrutiny of compliance programs

Enterprise Risk Management and Anti-Corruption

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Broadening Risk Management

• Financial stability• Quality control• Health & safety• Environment• Labor

Focus Today: Trend:Holistic Approach

• Supply chain• Compliance and

corruption • IP protection

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CREATe.org White Paper:Addressing Corruption Risk Through ERM

Integrating anti-corruption into overall risk management

• Practical guidance• Templates and

checklists

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Enterprise Risk Management

IDENTIFY1. What risks

does the company face?

ASSESS2. How serious

are those risks?

MANAGE3. What steps

should a company take to manage risks?

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1. Identify Risks

Identify Risks:Strategic, Operational,Compliance, Financial,

Reputational

Establish context

Action:- In each of the 5 categories above, think about what

type of corruption risk you may face in your company- Define your relevant risks

• A Resource Guide to the U.S. Foreign Corrupt Practices Act

• U.K. Bribery Act 2010 Guidance

• Good Practice Guidance on Internal Controls, Ethics, and Compliance

• Partnering Against Corruption – Principles for Countering Bribery

• Fighting Corruption in the Supply Chain: A guide for Customers and Suppliers

• and others

Anti-Corruption Compliance Guidelines

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Identifying and Assessing Specific Corruption Risks

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Geography Industry & Sector

Organizational & Operations

TransactionalThird Parties

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2. Assess Risks

Severity of Occurrence

Probability of Occurrence

Actions:• Rate the risks• Use rankings such as high, medium, low

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Risk Probability and Severity

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3. Manage Risks

Communication

Risk Response

Monitoring & Review

Actions:• Assess and improve internal systems to prevent corruption

inside the company • Take steps to manage anti-corruption in the supply chain

including due diligence

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How Do Companies Manage Corruption Risks?

70% of companies do not have financial controls specifically designed to detect corruption or do not consistently use them if they do have such controls

80% do not have specific procedures to direct employees to follow policies

65% do not conduct a formal anti-corruption risk assessment before entering a new market or business partner relationship

62% reported that they do not provide anti-corruption training to employees

86% do not monitor the anti-corruption compliance of their supply chain and business partners

Supplementing Legal with a Holistic Management System Approach

Legal-Only Approach

• Contract-driven

• Compliance is a silo in the legal department

• Typically reactive

• Seek legal remedy if problems are discovered

Management System Approach

• Builds awareness throughout the company

• Communicates clear expectations

• Preventative, proactive

• Builds on management systems used for other business operations

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What Systems Should be in Place?

Cross-Functional Compliance Team

Scope & Quality of Risk Assessment

Management of Supply Chain

Training & Capacity Building

Monitoring & Measurement

Corrective Actions & Improvements

Policies, Procedures & Records

Effective corruption prevention involves 7 categories:

Five Levels of Maturity for Each Category

5 Mature system covering all anti-corruption issues and focused on continual improvement

4 Systems are well developed and implemented

3 Systems approach; inconsistent implementation and monitoring

2 Limited, reactive systems

1 Little or no awareness or repeatable processes

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3-step service

• Online Assessment

• Expert Evaluation• Improvement Plan

-200+pg Guides for Improving Programs

CREATe LeadingPractices

eLearning Advisory

15-minute courses

• Anti-Corruption• Introduction to IP• Trade Secret

Protection

Tailored assistance

• Workshops• Implementation

guidance• Webinars

Thank Youcmoss@CREATe.org lbenton@CREATe.org

For more information about CREATe Leading Practices,

please contact us at info@create.org

Wednesday, February 11, 2015Doing Business in Mexico: Pact for Mexico and

Emerging Compliance Implications

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