By Samuel Rubenfeld
Investing in compliance is on the rise but those tasked with implementing it are still concerned about exposure to risk, a new survey by Kroll found.
The survey of 139 corporate compliance executives, conducted between July 2011 and February of this year, found that 95% of respondents believe their companies’ exposure to bribery risk increased or held steady over the past few years, and that 85% of respondents said it will increase or stay the same in the future.
But compliance departments are growing to meet the risk. More than half of those who took part in the survey said their compliance budgets had increased, and 49% said their compliance departments had increased hiring. Nearly three-fourths of respondents said they were extremely or very well prepared to handle bribery problems.
“I think there was a time period where the C-Suite needed to be convinced of the importance” of investing in compliance, said David Holley, a senior managing director at Kroll who co-authored the survey, in an interview. “We’re generally past that time.”
As with other recent surveys, Kroll found that compliance professionals say third parties pose the largest overall risk to their firms. While 99% of respondents said their companies’ code of conduct had anti-bribery provisions for their employees, only 73% did for third parties.
“Rolling out an effective FCPA compliance program from start to finish involves a lot of resources,” said Holley, especially when it potentially would require a roll-out to tens of thousands of vendors.
Companies in the pharmaceutical industry are the most highly exposed to anti-bribery compliance risk, Kroll found. But the survey also found the industry is the most prepared to handle the risk, with 100% of respondents saying they screen third parties. Only 65% of respondents in other industries screen their third parties, Kroll found.
Asked why, Holley said it’s because U.S. pharmaceutical companies vet their third parties for a huge number of things beyond bribery risk, including risks associated with intellectual property protection, black or gray market losses and more.
“The sheer number of third parties they rely on is enormous,” he said.