Fraud, money laundering, misselling and other types of misconduct remain endemic in business. This is despite concerted efforts by law makers, rule makers and company executives themselves to clamp down on illegal and dishonest activity carried out within corporations.
Australia’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry uncovered wrongdoing on a massive scale. The causes? “Too often, the answer seems to be greed – the pursuit of short term profit at the expense of basic standards of honesty,” the Commission said in its interim report.
It is a familiar problem in all industries, in all countries. According to EY’s 15th Global Fraud Survey of 2,550 executives working in multiple sectors in 55 countries, 11% of respondents had experienced a significant fraud in the last two years; and 33% said that bribery and corruption had occurred widely in business in their country. The consequences for companies of failing to prevent misconduct – or to comply with the laws, regulations, industry standards and internal policies designed to deal with it – are serious.
Clearly business leaders have to act. But how? The starting point must be to build a strong sense of corporate integrity. A company that adheres to sound principles of morality, ethics and honesty will be better placed to combat illegal and irregular conduct. It will also improve its business performance; integrity is not only about stopping what is bad for the company, it is also about promoting what is good.
The corporate integrity agenda should contain four elements: good governance; a culture focused on honesty; effective controls for managing fraud and compliance risk, enabled by the latest technology; and data insight, using predictive analytics, artificial intelligence and other innovative digital methods. Only by following a sound integrity agenda will companies bridge the gap between corporate intentions and actual behaviour.
This FT Briefing will look at the fraud, misconduct and compliance risks facing companies today. It will bring together general counsel, chief compliance officers, chief operating officers, chief risk officers, chief data officers and others from various industry sectors to discuss how best to manage these risks by enhancing corporate integrity.