Fighting Global Corruption by @EricPesik
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Fighting Global Corruption by @EricPesik

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Fighting global corruption by building sustainable corruption risk assessment process and developing a proactive risk management plan proportional to your organization’s risk exposure. Presented by ...

Fighting global corruption by building sustainable corruption risk assessment process and developing a proactive risk management plan proportional to your organization’s risk exposure. Presented by Eric Pesik at Asia Risk Professionals Congress at the Carlton Hotel, in Singapore, March 2012

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  • These are the slides from my presentation at the Asia Risk Professionals Congress at the Carlton Hotel, in Singapore, March 2012. These slides have been modified from my live presentation to add some comments that help with the flow and direction of the presentation, and to remove some slides that do not make sense without a live speaker. I am providing my slides under Creative Commons Attribution license. You may distribute, remix, tweak, and build upon my work, even commercially, as long as you credit me for the original creation by linking to this page URL. All images are from Microsoft Office online, used with permission from Microsoft, or from Flickr Creative Commons, used under Creative Commons Attribution license. You must obtain the original image from its source before reusing.
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Fighting Global Corruption by @EricPesik Fighting Global Corruption by @EricPesik Presentation Transcript

  • Fighting GlobalCorruption Presented by Eric Pesik Asia Risk Professionals Congress Carlton Hotel, Singapore, 2012
  • Fighting Global CorruptionFighting global corruption bybuilding sustainable corruption riskassessment process and developing aproactive risk management planproportional to your organization’srisk exposure
  • Agenda:1. New Anti-Corruption Laws2. Risk Assessment Process3. Risk Management Plan4. Responsibility of Risk Officers
  • Agenda:1. New Anti-Corruption Laws2. Risk Assessment Process3. Risk Management Plan4. Responsibility of Risk Officers
  • Anti-Corruption Laws
  • US Foreign CorruptPractice Act (FCPA)
  • UK Bribery Act
  • China Anti-Bribery Amendments
  • Commercial Bribery
  • Bribery ofGovernmentOfficials
  • Dodd-FrankWhistleblower
  • Global Reach
  • EveryCountryProhibitsBribery
  • Agenda:1. New Anti-Corruption Laws2. Risk Assessment Process3. Risk Management Plan4. Responsibility of Risk Officers
  • FCPA Fines in Millions Siemens (Germany) $800 KBR/Halliburton (USA) $579 BAE (UK) $400 Only USSnamprogetti/ENI (Holland/Italy) $365 company Technip (France) $338 JGC Corporation (Japan) $219 Daimler AG (Germany) $185 Jeffrey Tessler (UK) $149 Alcatel-Lucent (France) $137 Panalpina (Switzerland) $82
  • 58Average age of persons currently in US prisons for FCPA convictions Aaron G. Murphey, Foreign Corrupt Practices Act:A Practical Resource for Managers and Executives, 2001 John Wiley & Sons, Inc.
  • Value of All Losses (Occupational Frauds by Category) Financial 68% Statement Fraud Asset 21% Misappropriation Corruption 11% May exceed 100% because cases involve multiple categories.Association of Certified Fraud Examiners, Report to the Nations 2010 Global Fraud Study
  • Frequency of All Losses (Occupational Frauds by Category) Financial 5% Statement Fraud Asset 86% Misappropriation Corruption 33% May exceed 100% because cases involve multiple categories.Association of Certified Fraud Examiners, Report to the Nations 2010 Global Fraud Study
  • BalancingProportionality
  • Risk byGeography Transparency International 2010 Corruption Perceptions Index
  • Risk by IndustryEach industry is different
  • Risk byCustomers
  • Intermediariesincrease risk Risk byIntermediaries
  • Risk byCompany
  • Risk byConstituents
  • Corruption Risk
  • Risk InventoryLikelihood & Impact Scale Personal Commitment Form
  • Likelihood Rating Scale Almost Unlikely Likely Certain Not more More than One everyFrequency: than every 3 once per 1-3 years years yearProbability: 10% - 30% 30% - 60% > 60%
  • Impact/Severity Rating Scale Minor Moderate Major Financial < $1 Million $1-5 Million > $5 Million Impact: Govt. / Official Pub Awareness Pub ConcernReputational Investigation Impact: Regional State / National International Internal Shareholders Public Markets Little or no Business Unit Company Impact or Function Operations Asking for Doubting CancelingOperational Reassurances Business Business Impact: Individuals Individuals Criminal Disciplined Terminated Sanctions Employee Employee Loss of Morale Turnover Mgrs/Execs
  • Risk Inventory1. Political Contributions/Activities2. Charitable and Industrial Contributions3. Company Memberships4. Expense Accounts5. Consultants and Professional Service Providers6. Leadership7. Company Culture8. Accurate Books and Records9. Expense Accounts10.Acquisitions11.Business Combinations12.Third Party Representatives and Agents13.Procurement14.Gifts, Gratuities, and Entertainment15.Export, Import, Customs
  • Cost-benefit analysisLikelihood & Cost ofMagnitude Avoidance
  • Low Likelihood High Likelihood High ImpactHigh Impact High Impact High LikelihoodLow Likelihood Low ImpactLow Likelihood High LikelihoodLow Impact Low Impact
  • Low Likelihood High Likelihood High ImpactHigh Impact High Impact Add Cost to Avoid or Mitigate High LikelihoodLow Likelihood Low ImpactLow Likelihood High LikelihoodLow Impact Low Impact
  • Agenda:1. New Anti-Corruption Laws2. Risk Assessment Process3. Risk Management Plan4. Responsibility of Risk Officers
  • Risk InventoryLikelihood & Impact Scale Personal Commitment Form
  • Low Likelihood High Likelihood High ImpactHigh Impact High Impact High LikelihoodLow Likelihood Low ImpactLow Likelihood High LikelihoodLow Impact Low Impact
  • Low Likelihood High Likelihood High ImpactHigh Impact High Impact High LikelihoodLow Likelihood Low ImpactLow Likelihood High LikelihoodLow Impact Low Impact
  • Low Likelihood High Likelihood High ImpactHigh Impact High Impact High LikelihoodLow Likelihood Low ImpactLow Likelihood High LikelihoodLow Impact Low Impact
  • Low Likelihood High Likelihood High ImpactHigh Impact High Impact High LikelihoodLow Likelihood Low ImpactLow Likelihood High LikelihoodLow Impact Low Impact
  • Low Likelihood High Likelihood High ImpactHigh Impact High Impact High LikelihoodLow Likelihood Low ImpactLow Likelihood High LikelihoodLow Impact Low Impact
  • Risk InventoryLikelihood & Impact Scale Personal Commitment Form
  • Risk InventoryLikelihood & Impact Scale Risk Management Plan 1. 2. 3. Personal 4. Commitment 5. Form 6. 7. 8. 9. 10.
  • Example:Anonymous Tip Line
  • Tip 40.2% Management Review 15.4% Internal Audit 13.9% By Accident 8.3% Account Reconciliation 6.1% Document Examination 5.2% External Audit 4.6% Surveillance/Monitoring 2.6% Notified by Police 1.8% Confession IT Controls 1.0% 0.8% Fraud DetectionAssociation of Certified Fraud Examiners, Report to the Nations 2010 Global Fraud Study
  • Tip With Hotline 47.1% Tip 40.2% Management Review 15.4% Internal Audit 13.9% By Accident 8.3% Account Reconciliation 6.1% Document Examination 5.2% External Audit 4.6% Surveillance/Monitoring 2.6% Notified by Police 1.8% Confession IT Controls 1.0% Fraud Detection 0.8%Association of Certified Fraud Examiners, Report to the Nations 2010 Global Fraud Study
  • Tip Without Hotline 33.8% Tip 40.2% Management Review 15.4% Internal Audit 13.9% By Accident 8.3% Account Reconciliation 6.1% Document Examination 5.2% External Audit 4.6% Surveillance/Monitoring 2.6% Notified by Police 1.8% Confession IT Controls 1.0% 0.8% Fraud DetectionAssociation of Certified Fraud Examiners, Report to the Nations 2010 Global Fraud Study
  • 13.3% Tip Without Hotline 33.8% Tip 40.2% Management Review 15.4% Internal Audit 13.9% By Accident 8.3% Account Reconciliation 6.1% Document Examination 5.2% External Audit 4.6% Surveillance/Monitoring 2.6% Notified by Police 1.8% Confession IT Controls 1.0% 0.8% Fraud DetectionAssociation of Certified Fraud Examiners, Report to the Nations 2010 Global Fraud Study
  • Dodd-FrankWhistleblower
  • Agenda:1. New Anti-Corruption Laws2. Risk Assessment Process3. Risk Management Plan4. Responsibility of Risk Officers
  • Risk InventoryLikelihood & Impact Scale Risk Management Plan 1. 2. 3. Personal 4. Commitment 5. Form 6. 7. 8. 9. 10.
  • ConstituencyBuy-in
  • ManagementBuy-in
  • Risk Management Plan Low Like o High Impliht od ac High Impact 1. High Likeliho 2. od High Impact 3. 4.5.6.7.8.9.10. Low Likelihoo d High Likeliho od Low Impact Low Likelih Low Impactood High Likeliho od Low Impact
  • OfficialTone From the Top
  • don’t get trapped
  • Fighting GlobalCorruption
  • Questions?
  • All images are from Microsoft Office Online, used withpermission from Microsoft, except for the followingimages licensed under Flickr Creative CommonsAttribution License Businessman behind web By internets_dairy Meeting nieuwe leden flickr.com/photos/16339684@N00/2784622731/ flickr.com/photos/kripptic/1954828422/ Parlament by Convergència Democràtica de Catalunya Blue Telephone by By UggBoy/UggGirl flickr.com/photos/convergenciademocratica/6197445493/ flickr.com/photos/uggboy/5345135964/ Signpost by Andrea_44 flickr.com/photos/8431398@N04/2680944871/ AdjustTie by Dplanet flickr.com/photos/dplanet/94441582/ Businessman by Kripptic No Pictures by Dplanet flickr.com/photos/kripptic/1954828422/ flickr.com/photos/dplanet/94442623/