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Detection and Response to Procurement Fraud and Corruption Risk

Updated: May 17

Does your organisation create the opportunity to receive and analyse hotline reports, does leadership understand their value for reputation protection and proactive decision making, and is your hotline adequately communicated internally and externally to ensure that you maximise the opportunity to receive fraud and corruption reports.

Risk is just an expensive substitute for information


Most organisations have a different compliance structure and approach in dealing with whistleblower reports. The size, scale, and international reach of an organisation can affect the structure and response an organisation has, however, there are common themes that can be introduced to ensure an adequate response. In this article, we discuss specific areas in which a whistleblower report can benefit an organisation.


INVESTIGATION

Dependent on the nature of the report a proactive area of response is at operational, tactical, and strategic levels of an organisation to investigate, detect and determine the veracity of the suspicions reported. Where practicable, an organisation should look at its operational, tactical, and strategic risk and in addition to the investigation should have a structured compliance risk mitigation response that considers fraud and corruption prevention, risk, detection, disruption, and where necessary financial recovery and sanctions.


An organisation should also examine its anti-fraud and corruption culture, reporting and decision-making mechanisms, and coordinated change management approach.


DECISION MAKING

An organisation that doesn't introduce a whistleblower hotline misses out on many opportunities to respond to these reports including the prevention and detection of corruption. It further reduces the ability of a Risk Committee, Executive, and the Board in their decision-making and response when examining the risk and best interests of the organisation.


CHANGE MANAGEMENT

In addition to the internal reporting procedures does your organisation have a structure in place to assess and mitigate the risk that is identified within the whistleblower report and subsequent investigations. Do you have a dedicated compliance capability and a change management process where policies and procedures, people and capability, and systems and controls can be examined and where appropriate controls enhanced or updated?


COMMUNICATION

The anti-fraud or corruption culture of an organisation can be introduced or enhanced through the internal and external communication it has with its staff, suppliers, and third parties around current risks. Briefing on reported risks, where appropriate, can be a valuable tool in building trust within an organisation and sending the message that an organisation is serious about receiving whistleblower reports and responding to the identified risks.


In cases where there is the potential for reputational damage, either a proactive disclosure or a prepared press statement should the need arise can be an important part of a communications strategy.


Additionally, where an organisation has a fraud and corruption mitigation training program, new risks and methods can be introduced into the training of key personnel to mitigate these risks in the future.


RISK ASSESSMENT AND APPROACH

Assessing risk and creating an organisation risk assessment requires access to all relevant internal and external data sources. This will assist the annual preparation of an organisation risk profile that drives the creation of a risk mitigation strategy and framework that includes mitigation controls, procedures, and expertise for identified risk.


So what other benefits do you believe that a whistleblower hotline can make to your organisation. In addition to preventing fraud and corruption risk, internal communication throughout an organisation creates an anti-fraud and corruption environment. The size and scale of an organisation structure and capability may determine the level of its compliance structure and capability, however, the introduction of a whistleblower hotline and its benefits can't be overstated.


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