Mitigating Human Resources Risks

1CRIGroup.com | zanjum@CRIGroup.com | © 2015 CRI Group, Inc.
MITIGATING
HUMAN RESOURCES RISKS

Human Assets Can Make
Your Business Fly – Or Sink
 The “human factor” is the common element in
most risk and crisis scenarios
 9 out of 10 risks or security problems are
caused by people inside your organisation

Business Risks on the HR Side
 Fraud
 Distribution scams
 Legal disputes
 Industrial espionage
 Intellectual property
theft
 Workplace theft
 Harassment &
discrimination claims
 Corruption
 Backlash vs. workouts
 Sabotage
 Kidnapping
 Extortion
 Unsecure data &
communications
 Workplace violence
(including violence against
executives and facilities)
 Organised crime
 Confidentiality
breaches
 Accidents
 Mismanagement
 Service
deterioration
 Contractual risk

Asian Labor Environment
 Asia is a growth area representing a major source of new
professionals…
 …Yet it is also a major center of labour ethics violations
 Unethical sources include: child labour, sweatshop labour,
forced labour, prison labour
 Cultural differences – “us vs. them” – make multinational
corporations vulnerable

HR-related Crime Scenarios
 Fraud, industrial espionage, intellectual property
theft and piracy, corruption, sabotage: staff are
often involved
 Data & communications are at risk from employees,
not just from external enemies
 Organised crime may recruit your staff, or plant
stooges

HR-related Crime Scenarios
 Workouts & downsizings can spark backlashes,
violence, asset stripping, hostage taking
 Product tampering extortionists are often
insiders
 Kidnappers rely on insider information

Common Traits of Companies
That Get Into Trouble
 Frequently rotating managers
 Poor public and corporate records
 Migration of cliques – “tribal loyalty”
 Corporate culture not instilled
 Neglect of due diligence practices
 Internal controls not firmly enforced
 No corporate HQ connection with key staff

Ongoing HR
Risk Mitigation
Employee Integrity Program (EIP)

Employee Integrity Program
(EIP) – Why Have One?
 Your organisation needs:
 Honest employees
 Effective internal controls
 Strong & visible deterrents

(EIP) — Why Have One?
 An effective EIP will help you:
 Reduce risks to your reputation
 Protect your resources
 Improve your bottom line
 Build your company’s value

(EIP) — Why Have One?
 An effective EIP will also help minimise losses
relating to:
 Internal fraud & theft
 Negligent hiring
 Workplace violence
 Workers’ compensation
claims
 Non-performance of duties
 Non-compliance

What Goes Into An Employee
Integrity Program (EIP)
 Background checks on senior or sensitive employees
 Professional pre-employment screening
 Monitoring and surveillance
 Spot checks on ethics compliance
 Substance abuse testing (USA)

What Goes Into An Employee
Integrity Program (EIP)
 Risk analysis of your organisation
 Whistle-blowing & complaint mechanisms
 Structured exit interviews
 Strict standard operational procedures to maintain
control over your organisation

Pre-Employment
Risk Mitigation

What is the most common
type of fraud in the world?
Answer:
Résumé fraud

Pre-Employment Screening
 LEVEL 1: Light Screening
 LEVEL 2: Medium Screening
 LEVEL 3: Full Screening
All companies should conduct thorough background
checks before hiring. Three different levels of pre-
employment screening are available to fit your needs.

 When considering pre-employment screening,
consider the following:
 Find out not just where and when, but why the
candidate left the previous job.
 Explanations of employers and copies of resignation
letters should not be taken at face value

— Three Levels of Scrutiny
LEVEL 1: LIGHT SCREENING
Level 1 checks include:
 Criminality check
 Verification of ID number
(many forgeries)
 Verification of last job
 Verification of highest degree
obtained
 Verification of address

Employment Screening —
Three Levels of Scrutiny
LEVEL 2: MEDIUM SCREENING
Level 2 checks include all of the checks in Level 1, plus:
 Verification of past 5 years employment
 Research into past financial behaviour

LEVEL 3: FULL SCREENING
Level 3 checks include all checks in Levels 1 & 2, plus:
 Verification of 10 years of employment
 Discreet in-depth reputational interviews
 Litigation checks

LEVEL 3: FULL SCREENING
 Firms owned, licences held, discipline actions
 Media research
 Property asset research
 Research into liens, bankruptcy records

Mitigating HR Risks
in Downsizing Scenarios

“Getting Even”
Downsizing, restructuring, liquidation, exit time,
firings, non-payment of bonuses, and similar actions
often lead to:
 The “Getting Even” syndrome
 “Tribal loyalties” that outweigh corporate loyalty
 Hidden liabilities, pensions, redundancy pay, other
issues

“Getting Even”
Additional threats include:
 Asset stripping, sabotage, theft, embezzlement
 Poison letters, dirty tricks
 Theft of trade secrets, intellectual property theft
 Attacks on computer systems
 Pre-departure “gifts” – including computer viruses
 Physical violence, hostage taking

Mitigating HR Risks
 Have effective business controls in place
 Control systems must be able to deter, detect &
respond to internal threats
 Have early warning systems to spot risks
 Carry out risk & threat assessments before
downsizings, firings or “bad news announcements”

Mitigating HR Risks
Other tactics to mitigate risks:
 Enhance management-staff communications
 Enhance crisis management planning
 Have contingency plans to deal with hostile
employees or ex-employees

Mitigating HR Risks
 Enhance security to protect people & premises
 Prevent unauthorised electronic access
 Protect & backup all operating, financial, and data
processing systems & crucial assets

Mitigating HR Risks
 Monitor departing staff on the way out
 Who are the staff most likely to stir trouble?
 Check employee computers for hostile plans
 Check ex-employees’ computers for erased files

And Upsizing Scenarios —
They Also Pose HR Risks
 Growth requires reviews of security & HR risks
 The “feel good” environment of expansion & high
turnover growth can blind a company toward its
risks
 Businesses outgrow existing controls — that’s when
security gaps appear

And Upsizing Scenarios —
They Also Pose HR Risks
 Traditional organisational, financial & security
controls may be inadequate protection against
disaster
 Business processes can break down, and
organisational mismanagement ensues

Case Studies
Background checks reveal alarming discrepancies.
The following are based on true cases.

Case Studies
CASE 1: Forgeries and Fakes
 The applicant claimed to hold a university degree
 The university named by the candidate reported that the
applicant’s degree was ‘fake and forged’
 A reference letter, apparently signed by the university’s
Deputy Controller of Examination, was also ‘fake and forged’
 A second degree (BBA) claimed by the applicant was never
conferred, and the claim was false

Case Studies
CASE 2: False Employment Record
 A post-employment verification is conducted on a current
employee
 One of the employee’s previous employment records is
revealed as fake — she had never been employed by the
company, as claimed
 For the rest of her employment details, there were
conflicts in claimed job titles, duties and salaries

Case Studies
CASE 3: Fraud Alleged by Former Employer
 When contacted, an applicant’s previous employers
reported that the applicant had been terminated due to
cash embezzlement, harassment and workplace
violence
 A second employment verification revealed this
termination, and the fact that the employee caused a
financial loss to his employer

Case Studies
CASE 4: Fake Reference Letter
 Applicant provided a reference letter from her previous
employer
 This employer was contacted and shown the reference
letter
 The organization revealed that the applicant had never
been employed by them, and the letter she had provided
was a fake

Professional Trade Associations
Corporate Memberships/Alliances

Contact Us
Corporate Head Office
917, Liberty House, DIFC
P.O. Box 111794
Dubai, U.A.E.
Tel: +971-50-9038184
Fax: +971-4-3589094
Toll Free: +971 800- CRI LLC (274-552)
Email: cridxb@CRIGroup.com
EMEA Head Office
37th Floor, One Canada Square
Canary Wharf, London E14 5AA
United Kingdom
Tel: +44 203 4782449
Tel: +44 207 712 1626
M: +44 7584 492963
Email: dabazi@CRIGroup.com –
Business Development

Contact Us
Qatar
Office No. 130, 1st Floor
Al – Jaidah Square
63 Airport Road
P.O. Box 24369
Doha, Qatar
Tel: +974 4426 7339
M: +974 7406 6572
Email: doha@CRIGroup.com
Pakistan
Level 12, #1210,1211, 55-B
Islamabad Stock Exchange (ISE) Towers
Jinnah Avenue, Blue Area
Islamabad, Pakistan
Toll Free: +92 080000274
Tel: +92 (51) 111 888 400
Email: pakistan@CRIGroup.com

Contact Us
Singapore
1 Raffles Place, #19-07, Tower 2
One Raffles Place
Singapore 048616
Tel: +65 6808 5636
Fax: +65 6808 5800
Email: singapore@CRIGroup.com
Malaysia
Lot 2-2, Level 2, Tower B
The Troika, 19 Persiaran KLCCM
50450 Kuala Lumpur, Malaysia
Email: malaysia@CRIGroup.com

Contact Us
Hong Kong
Rooms 05-15, 13A/F, South Tower
World Finance Centre
Harbour City 17
Canton Road
Tsim Sha Tsui Kowloon
Hong Kong
Tel: 852-2208-6064
Email: cri.hongkong@CRIGroup.com
USA
600 Third Avenue, Suite 252
New York, NY 10016
United States
Tel: +1 (646) 571-2501
Email: newyork@CRIGroup.com

Contact Us
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Mitigating Human Resources Risks

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