As organisations transition from managing the COVID- 19 crisis toward building economic resilience, many are struggling to maintain integrity standards, according to the latest Ernst & Young Global Integrity Report which surveyed more than 1,700 respondents from 21 emerging markets including Nigeria.
Excerpts from the report reveal that 63 percent of respondents believe businesses operating in emerging markets are more likely to be adversely impacted by the current COVID-19 disruption. 32 percent of respondents in emerging markets believe that bribery and corrupt practices present the greatest risk to the long-term success of their businesses, compared to 42 percent for Nigeria, 35 percent for South Africa and 38 percent for Kenya, the African respondents.
30 percent of respondents believe that the risk of a cyber and ransomware attack is a significant threat, compared to 40 percent for Nigeria, 37 percent for South Africa and 56 percent for Kenya.
“Interestingly, all three African countries surveyed say that standards of integrity in their organisation have generally improved in the last two years,” Sharon Rooyen, EY Africa Forensic & Integrity Services Leader noted.
According to the report, Kenya and South Africa raising the alarm about misconduct is still a significant issue in comparison to other emerging markets surveyed. Worryingly, in Nigeria, 29 percent of respondents were uneasy to report such concerns due to fear of the impact of their future careers compared with 45 percent in Kenya and 33 percent in South Africa.
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This suggests that organisations need to revisit their whistleblowing programs to ensure employees feel that they can safely report misconduct without reprisal, the report said. “Whistleblowing programs form a key pillar of the organisation’s corporate governance framework and management and board oversight will be crucial for its success,” EY said in the report.
African respondents did not think that the complex regulatory environment posed a very high risk perhaps because of the perception that the regulatory environment in the three African countries is less complex than some of the more mature markets.
The report highlights four key areas for organisations to consider in better managing the risk of corporate misconduct: Corporate integrity should be top priority in management’s playbook
Business leaders are always in a crucial position when it comes to making difficult decisions. The report highlights that 55 percent of respondents in emerging markets say their management frequently communicates the importance of operating with integrity, compared with only 39 percent in developed markets. This proportion varies significantly by country from just 25 percent in UAE, rising to 53 percent in Malaysia and 67 percent in Kenya, 60 percent in Nigeria and 57 percent in South Africa.
Voicing misconduct through whistleblowing channels.
37 percent of respondents in emerging markets say they have not reported concerns about integrity due to apprehensions about their career progression. Further, in Nigeria, 29 percent of respondents say they have not reported concerns due to fear for personal safety, compared with 50 percent in Kenya and 49 percent in South Africa 49 percent.
Embracing disruptive technologies while protecting data
Emerging markets are embracing disruptive technologies and adapting to digital life. While there has been an overwhelming shift to using new technologies and increased use of the internet with work from home, the risk exposure for organisations has amplified. The report highlights that emerging markets are leading the way in mitigating growing risks, with 55 percent offering training to employees on how they can prevent data security breaches, compared with 45 percent in developed markets. Organisational preparedness is also robust in emerging markets with 42 percent of respondents having an incident response plan in the event of a data security breach.
Tackling third party integrity risks
Remote working, restricted operations and limited mobility in many locations have also made it riskier to manage third-party relationships. Only 35 percent of businesses in emerging markets are very confident that their third-party partners operate with integrity, compared with 47 percent of Kenya respondents, 46 percent of South African respondents and 33 percent of Nigerian respondents. Conducting adequate due diligence before onboarding a third-party vendor is critical to mitigate long-term risks and comply with enforcement standards. Technology solutions such as automated dashboards and data analytics can be enablers to bring efficiency into the third-party due diligence process.
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