As organisations transition from managing the Covid-19 crisis toward building economic resilience, many are struggling to maintain integrity standards, the EY Global Integrity Report revealed.
According to the report, 63 per cent of respondents believe businesses operating in emerging markets are more likely to be adversely impacted by the current disruption. This is higher in India where close to 82 per cent respondents echo the sentiment.
Regulatory scrutiny and remote working as a result of the pandemic are aggravating these issues. About 32 per cent of respondents in emerging markets believe that bribery and corrupt practices present the greatest risk to the long-term success of their businesses, compared with 25 per cent in India. 30 per cent of respondents believe that the risk of a cyber and ransomware attack is a significant threat, compared to 41 per cent in India.
Arpinder Singh, Partner and Head – India and Emerging Markets, Forensic & Integrity Services, EY said, “As organisations navigate the crisis and prepare for a ‘Great Reset’, corporate revival and recovery efforts should not get derailed by fraud, bribery corruption risks. Business leaders should go beyond today’s travails to review their integrity agenda and determine the next steps to bolster their risk and compliance programs. Leadership commitment to foster a culture of integrity and trust amongst stakeholders will be pivotal to derive long term value and preserve an ethical future.”
The report highlights four key areas for organisations to consider in order to better manage the risk of corporate misconduct. These include: Corporate integrity should be top priority in management’s playbook, Voicing misconduct through whistleblowing channels, Embracing disruptive technologies while protecting data and Tackling third party integrity risks.
The report said that 55 per cent of respondents in emerging markets believe their management frequently communicates the importance of operating with integrity, compared with only 39 per cent in developed markets. This proportion varies significantly by country from just 25 per cent in UAE, rising to 53 per cent in Malaysia and 66 per cent in India.
Also, 37 per cent of respondents in emerging markets say they haven’t reported concerns about integrity due to apprehensions about their career progression. Worryingly, nearly 3 in 10 kept their concerns private out of fear for their own personal safety. In India, 49 per cent of respondents were uneasy to report such concerns.
Only 35 per cent of businesses in emerging markets are very confident that their third-party partners operate with integrity, compared with 56 per cent of respondents from India.
Conducting adequate due diligence before onboarding a third-party vendor is critical to mitigate long-term risks and comply with enforcement standards.