Anti-Bribery Compliance: Implications of a Regulated Industry on Risk Assessments

Assessing risk is one of the essential components of an anti-bribery compliance program.  Whether an industry is regulated is among the factors that respected commentators and organizations cite as being a favorable consideration in assessing risk.  The concept underlying this line of thinking is that regulation in the form of rigorous oversight is more likely to deter questionable conduct of almost any kind. To the degree that rigorous enforcement actually takes place, it can be among a number of factors that may lessen risk in various settings.

It must always be kept in mind that entities do not have unlimited resources.  How best to allocate resources is a critical consideration in the implementation and monitoring of a compliance program.  As much as there is a need to be sensitive to risks and to ensure that compliance considerations are given sufficient attention, entities have no choice but to allocate their resources.  Resources should be focused where the risks are believed to be greater.  As a result, an assessment that suggests that an industry in a particular country is subject to rigorous regulation may allow for resources to be relocated in part to other areas of greater risk.  It would not entirely eliminate the need for ongoing monitoring.

But care has to be exercised in determining whether an industry is rigorously monitored.  Just because a country has a robust statutory or regulatory framework does not necessarily mean that enforcement is rigorous.  Insufficient staffing may be an issue or a political climate may still impede rigorous regulation.  The realities of what is actually taking place in terms of regulation is fundamental to any evaluation.

A related consideration is whether the rule of law prevails in the enforcement of a country’s laws and regulations.  In such situations, rigorous enforcement may be overcome by Improper inducements.  However, rigorous enforcement is less likely to be subject to such abuses in countries where the rule of law prevails and civil society is ever present,

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