ISO 37001 Certification: a Proclamation of Business Integrity

It’s a well-known World Bank statistic, but one that bears continual repeating: More than US$1.5 trillion – or 2% of world gross domestic product – is paid in bribes each and every year, contributing to the demise of governments, inadequate social services, inferior infrastructure, low-quality goods and services, and a general strain on public and private sector integrity and reputation.

But the past several years have seen marked progress in the global fight against bribery and corruption, particularly with the adoption of ISO 37001 “Anti-Bribery Management Systems,” which provides generally accepted standards for establishing, implementing, maintaining, reviewing and improving an organisation’s anti-bribery management system.

The global adoption of the standard means that organisations worldwide can now publicly demonstrate their intent to battle bribery via review, examination and certification of their systems to the ISO standard. And in doing so, those certified organisations are realising many key benefits that come with certification, and the extended impact certification has on their supply chain and third-party partners.

ISO 37001 Certification: A Conscientious Decision

ISO 37001 certification is not currently mandated by governments around the world, with the exception of Malaysia and a few other countries which are considering certification as a requirement for private sector organisations bidding for government contracts. That said, multi-national organisations are increasingly seeking certification as a conscientious decision to improve their operations for the good of the overall organisation.

In doing so, those organisations are making a strong statement to their stakeholders, customers, authorities, third-parties and the international marketplace that they are taking all necessary measures to review, amend and improve their systems and processes to control and prevent bribery.

Even more important, to verify compliance and achieve such certification, those organisations are willing to expose their operations to outside independent auditors who are specifically trained in identifying risks and weaknesses within the organisation, while making recommendations for improvement.

From an integrity perspective, the result of certification to the ISO 37001 standard can help reduce internal and external corruption risks, manage compliance risks and boost the public perception and reputation of the organisation as a whole.

This can provide the organisation with certain advantages in the tender process and give the organisation a competitive edge in business development.

Take for example the case of Mubadala Investment Company PJSC (Mubadala), a state-owned holding company that can be characterised as a sovereign wealth fund in the United Arab Emirates, a country widely known for its relatively high rankings on the annual Transparency International Corruption Perception Index.

In 2019 Mubadala called on CRI Group’s ABAC Center of Excellence to attain ISO 37001 certification. Upon completion of the extremely thorough and careful certification process, Mubadala Head of Ethics & Compliance noted that achieving such certification has helped his organisation provide full confidence to its partners and shareholders, and has opened avenues of investment for international and national companies because Mubadala enjoys a great rapport with the business community as a competent and truthful entity.

“We are very proud to attain this certification. It demonstrates our strong commitment to the highest standards of ethics and integrity in our activities. This achievement specifically affirms the presence of anti-bribery management systems across Mubadala that support a culture of transparency and compliance in line with the highest global standards.” Mubadala Head of Ethics & Compliance said.

The Ripple Effect of ISO 37001 Certification

While one of the most beneficial advantage of certification is that it formally announces to the global marketplace that the organisation has gone to great lengths to demonstrate a high level of integrity in its compliance program and can be looked upon as a trusted partner when it comes to business affiliations and future business dealings, there is an notable down-stream effect as well.

That’s where the standard requires intense third-party due diligence to verify that the organisation’s supply-chain partners maintain a strong commitment to anti-bribery compliance. This subsequently motivates the organisation’s business partners, suppliers and third-party providers to examine and improve their own practices, knowing that the organisation will not conduct business with outside providers that don’t measure up to its internationally accepted compliance standards.

And managing third-party risks will result in the ongoing supply of high-quality products and services, on-time delivery, reduced legal liability, increased stakeholder protection, higher customer satisfaction and improved reputation, to name just a few of the associated benefits.

ISO 37001 Certification Improves the Organisation

Finally, ISO 37001 certification is structured in a way that not only identifies risks and weaknesses within an organisation’s anti-bribery framework, it also outlines measures designed to improve that framework and, in turn, contribute to strengthening the overall operation. Here are some examples:

Financially, certification can help identify redundancies in the processes used to combat anti-bribery and corruption, potentially reducing the costs associated with duplication. Additionally, through certification, one can assume that demonstrating an adequate procedures defense may in many cases reduce legal costs in bribery cases and investigations, while also reducing or eliminating potential fines levied in such cases.

Operationally, certification can help to streamline internal processes and controls, and – through effective top-down management advocacy – ensure that all staff levels of the organisation stand united in the fight against bribery and corruption.

Ethically, certification shows that the organisation is making a conscientious choice to protect its customers by taking strong stances against the effects of bribery, which include overpriced products or services, defective parts, and under-qualified labor – all of which can produce economic hardship, physical harm or even death.

From a brand perspective, certification demonstrates that the organisation is committed to operating in an ethical environment, taking strong measures to prevent bad actors from succeeding and exposing the organisation to negative media publicity, adverse public reaction and damaged reputation.

And from business development standpoint, certification can effectively enhance the organisation’s ability to secure new business contracts, as public sectors around the world are increasingly requiring such certification as a qualification in the bidding process for large-scale contracts.

It’s no secret why multi-national organisations are increasingly realising the many benefits of ISO 37001 certification, as they enjoy improved internal systems and procedures, greater operational efficiency and top-down confidence throughout the organisation, to reduced corporate risks, stakeholder liability, and a resulting competitive edge in the international marketplace.

ISO 37001:2016 Anti-Bribery Management System certification is offered under CRI Group’s ABAC® Centre of Excellence, an independent certification body established for Anti-Bribery Management System training and certification, ISO 37301 Compliance Management Systems and Risk Management System certification. The program will be tailored to your organisation’s needs and requirements. For assistance in developing and implementing a fraud prevention strategy, contact ABAC today or get a FREE QUOTE now!

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, Due Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

Filed under: Anti-Bribery Anti-Corruption Solution, Compliance Solution, ISO 37001, Resources, Third-Party Risk Management by admin
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Rent Checks Post-Brexit

Uncertainty around Brexit continues, and the possibility of a no-deal means it is still challenging to predict what will happen when the UK leaves the EU. The Government is yet to release official guidance on what letting agents and Landlords will need to do, should a no-deal Brexit be the outcome of the process. The lack of clarity from the Government has already caused problems. Many landlords are averse to letting their properties to non-UK nationals in case they are in breach of the Right to Rent rules, post-Brexit. The Government is under increased pressure to give clear guidance on post-Brexit Right to Work and Right to Rent checks.

What do we know so far?

Right to Rent is creating a hostile environment in the private rented sector with more landlords refusing to consider renting to non-British nationals, including EU citizens, due to concerns about Brexit. According to research from the Residential Landlords Association (RLA), 44% of private rented sector landlords are less likely to rent to those without a British passport.

The Right to Rent scheme – introduced in 2016 – has never been popular as it requires landlords to carry out immigration checks to make sure that they do not rent a property to someone who does not have the right to live in the UK. Furthermore, landlords face prosecution if they know or have ‘reasonable cause to believe’ that the property they are letting is occupied by someone who does not have the right to rent in the UK.

Potential changes post-Brexit

One change which may be implemented post-Brexit is the introduction of a digital checking service. A white paper in December last year* suggested this would enable prospective tenants to view and ‘verify’ their immigration status. Meaning landlords could confirm the applicant’s eligibility to rent far more quickly. Those renting to foreign nationals from the EU would no longer need to manually check the documents which are currently required under the right to rent legislation.

Summary

There’s no denying that both landlords and EU tenants have many unanswered questions when it comes to Brexit and right to rent legislation, mainly down to the fact that a deal has not yet been decided. The 31st October 2019 should hopefully bring a clearer picture and provide the answers both parties need.

Let us know if you would like to find out more. If you have any further questions or interest in implementing a digital checking service in advance, please do get in contact.

*”The UK’s future skills-based immigration system”, by HM Government

About CRI Group

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, Due Diligence and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

Filed under: Background Investigation, Business Intelligence, Investigative Solution, Resources by admin
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Oil and Energy Companies Look to ISO 37001

In December 2017, the world’s largest builder of offshore rigs agreed to pay $422 million in penalties after entering a guilty plea for bribery charges connected with the Petroleo Brasileiro (Petrobras) scandal. Keppel Offshore & Marine Ltd. made illicit payments to both Petrobras officials and government representatives for more than a decade, between 2001 and 2014 (Reuters, 2017). ISO 37001

The sweeping multimillion-dollar bribery scandal that rocked Petrobras led to numerous investor lawsuits and the downfall of disgraced government officials. It also served as the embodiment of the huge risk of bribery and corruption that confronts the entire oil and energy sector.

Such a scandal is less surprising when one considers the scale of the oil and energy sector. It is a massive portion of the world’s economy, dealing mainly in petroleum – including upstream (exploration, development and production of crude oil or natural gas) and downstream (oil tankers, refiners, retailers and consumers) pipeline. As a raw material, petroleum is used for a number of chemical products, including pharmaceuticals, fertilisers, pesticides, solvents, and plastics.

The need to prospect, discover, and realise oil and energy production in various (and often far-flung) locations lends to the vulnerability to fraud – but geographic considerations aren’t the only risk factors.  Perhaps even more impactful is the complexity of business relationships required to operate in the industry – relationships with governments, contractors, regulators, investors/venture partners, equipment suppliers and other parties. Every such interaction and dealing can be considered susceptible to bribery and corruption where cutting corners may be considered profitable or even perceived to be “business as usual.”

Contributing to the risk is the volatile nature of oil and energy prices (along with all levels of the production chain), along with increasing global demand. This drives oil and energy companies to expand into new areas and markets that might carry a higher risk of bribery and corruption, including undeveloped, third-world countries with few controls, lax enforcement, or both. The reality, however, is that when bribery and corruption continues unabated, everyone loses – companies and governments are affected financially, and economic instability is increased.

ISO 37001 Anti-Bribery Management System standard

There is a solution that oil and energy companies can implement to help prevent and detect bribery and corruption: the ISO 37001:2016 Anti-Bribery Management System standard. The standard requires organisations to implement a series of procedures to prevent, detect and address bribery on a reasonable and proportionate basis according to the type and size of the organisation, and the nature and extent of bribery risks faced. It applies to small, medium and large organisations in the public and private sector and can be implemented in any country. Though it will not provide absolute assurance that bribery will completely cease, for organisations in the oil and energy sector that operate across global boundaries, this is a critical layer of protection that provides both anti-bribery controls and a system for compliance with various anti-corruption legislation, such as the FCPA and UK Bribery Act.

ABAC Center of Excellence Limited is accredited as a Conformity Assessment Body (Certification Body) to assist your organisation in attaining ISO 37001 ABMS certification through a thorough bribery risk assessment and audit covering the entire scope of the standard. The audit methodology is evidence-based, meaning any issues raised will be confirmed through adequate evidence that the ABAC Certification team has discovered during the audit.

Auditing techniques take a risk-based approach to examining your organisation’s Anti-Bribery Management System (ABMS), and the ABAC Certification team will increase the scale of the investigation if they determine that a specific process presents on a higher risk side.  Factors such as Impact, Negligence, Minor, Major, and Critical are taken into consideration during the audit.

A separate audit method is a process-based approach where the ABAC Certification examines the organisation’s processes while considering the interaction between those processes.  Finally, there is a sampling-based audit approach where ABAC Certification incorporates an appropriate sampling plan utilising samples from different ABMS processes to conclude and support the audit findings and results.

The audit is extremely thorough in its approach, which results in an accredited certification for the scope of the ISO 37001 Anti-Bribery Management System.  Because of the standard’s international acceptance and the thoroughness of the audit process, such certification can provide a valuable safeguard in demonstrating an “adequate procedures” compliance defence in cases posing a liability for a company’s failure to prevent bribery.

Once certified, an organisation must continue surveillance and undergo a recertification audit over three years to ensure that the organisation still complies with the ISO 37001 ABMS standard. During this time, any changes to processes, the addition of new partners and expansion/acquisition of new assets or energy contracts, etc. are carefully reviewed.

Lessons to learn

In the Keppel Offshore bribery and corruption case, implementing the measures above would have severely mitigated the risk that such a scandal could take root, much less proliferate over 13 years. The certification process involves a number of steps that include on-site audits to reveal any non-conformities – red flag areas that indicate a heightened risk of bribery and corruption. Such an assessment would have uncovered serious problems in Keppel Offshore’s processes, for example, and required corrective action plans to bring the organisation into compliance with its anti-bribery policy.

As corporations like Petrobras and Keppel Offshore have learned, there are deep repercussions for not taking proper preventative action with a robust anti-bribery management system (ABMS). The increase of anti-bribery and corruption legislation cannot be ignored by oil and energy companies, given that such regulations have, in most cases, achieved a global reach. For ownership and management, the stakes are especially high – accountability now includes criminal liability for organisation personnel as individuals, beyond (and in addition to) liabilities faced by the organisation. This trend will only continue as governments, and their publics become increasingly intolerant of fraud, bribery and corruption. Major media coverage and the real and perceived threat to governments’ economies contribute to this changing landscape of public opinion.

By extension, enforcement efforts are also being stepped up. Existing penalties are being applied with more regularities and new ones added with stronger impacts, including imprisonment and large fines – adding to the reputational damage that can occur as a result of bribery and corruption. Laws like the UK Bribery Act are being applied in force across international borders to put teeth in efforts to prevent, detect and punish corrupt corporate behaviour. While ISO 37001:2016 certification does not provide a shield against such enforcement measures, applying its standards can be considered a “good faith measure” for companies facing the consequences of bribery and corruption incurred in the past – and the measures prescribed by ISO 37001:2016 will no doubt have a mitigating effect on risk factors and the scale and scope of future acts of bribery and corruption should they occur.

Conclusion

With so much at stake in terms of money and resources, it should be no surprise that the oil and gas industry is rife with bribery and corruption. In today’s business climate, taking every step possible to prevent and detect bribery and corruption is more than just good business sense: It is essential to ensure a successful future. Implementing a worldwide recognised standard like ISO 37001 is a critical step forward for any organisation in the oil and energy industry.

Filed under: Anti-Bribery Anti-Corruption Solution, Compliance Solution, ISO 37001, Oil, Gas & Energy, Resources by admin
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Pharma and Healthcare Companies can Benefit from ISO 37001

Pharma and Healthcare Companies can Benefit from ISO 37001

When global pharmaceutical giant GlaxoSmithKline found itself in the Chinese government’s crosshairs for an alleged large-scale bribery scandal, there was perhaps little doubt that the consequences would be large-scale, as well. GSK was accused of systematically paying bribes and “gratuities” to doctors and hospitals in return for favourable product use and promotion. Pharma and Healthcare Companies ISO 37001 Benefits

China was in the midst of an emerging anti-graft campaign and imposed tough penalties against GSK and its executives: In the end, various company leaders were arrested and eventually given suspended prison sentences; GSK was fined $490 million; and the corporation published a statement of apology to the Chinese government and its citizens.

GSK’s fraud was arguably symptomatic of a widespread problem among pharmaceutical companies and healthcare providers (also called “life sciences” providers) with bribery and corruption in economies and healthcare markets around the world. Despite increased awareness of the problem and the application of sophisticated anti-fraud mechanisms, individual actors and agencies continue to defraud public and private health systems in the same ways exemplified by GSK in China.

Generally speaking, healthcare and pharma presents a target-rich environment for fraud. Quantitative data indicate that healthcare fraud has already risen starkly in recent years. The World Health Organisation (WHO) estimates that, where losses have been measured and the types of health expenditure have been covered, the average annual cost of fraud totals 7.29 per cent of healthcare budgets (Gee and Button, 2014). With rapidly ageing populations and the increased costs of providing long-term care, placing substantial pressure upon already overburdened health and social care sectors, healthcare spending will continue to increase worldwide. Unfortunately, this will also bring increased fraud schemes, as fraud perpetrators follow the money.

Bribery and corruption will continue to be a part of this upward trend in fraud. Certainly, not all cases are as broad and sweeping as GSK’s – in some cases, corruption occurs simply because the pharma or healthcare entity doesn’t have proper controls in place to uncover red flags. This also raises serious compliance issues in a landscape that has increasingly stringent regulations and enforcement measures to punish organisations that fail to implement proper anti-bribery and anti-corruption management procedures.

CRI Group investigates: Pharma corruption case included CFO

A major pharma company suspected bribery and corruption among some of its senior employees. The client’s corporate security department had received conflict of interest complaints that reportedly involved a range of employees, from sales personnel on up to the chief financial officer (CFO).

An outside investigation firm was called in launch a risk assessment of the company’s third-party relationships, which included several interviews with identified vendors and suppliers to help ascertain the engagement process and associated risks. This process uncovered the fact that the client had no policy or code of conduct concerning ethics, compliance and standards for appointment of vendors, suppliers and local agents. Most troubling was the fact that in most cases, senior management referred business opportunities to friends and family members.

Investigators found that one of the vendors, which was deeply engaged in procurements and the supply of services for the pharma company over the past five years, raised serious red flags. The vendor’s letterhead lacked a physical address, and the only contact information listed was a single cell phone number. It was clear this vendor warranted further investigation.

Investigators used site visits, background checks and interviews to determine that the suspicious vendor was not a company at all – but a single person. Not just any person, however – a public records check with a national database revealed that this individual, who was posing as a major vendor, was none other than the brother-in-law of the client company’s CFO. Worse still was the fact that this blatant fraud was being conducted right under the noses of procurement and finance professionals at this large and well-known pharma company.

The individual’s residence was being used as a warehouse to help facilitate the fraud. A comprehensive litigation records check found that he was previously convicted in federal court and spent three years in prison for the charges of selling counterfeit products, physician samples and expired medicines; further regulatory checks found that his pharmacist license had been cancelled.

A high fraud risk environment was created through the non-compliance of specific procurement rules, and a lack of integrity due diligence and proper risk management. Also, severe conflicts of interest were exposed, connected to high-level executive positions and benefiting those in positions of power.

The pharma company was exposed to highly unethical practices and could face regulatory and other government action. Furthermore, the company was at risk of civil and criminal investigations and liability, damage to its reputation, and loss in shareholder trust, all of which could adversely affect the company’s financial well-being.

A solution through ISO 37001:2016 ABMS

The case study above is not an outlier – such corruption cases are relatively common in such a broad and complex industry. The pharma company could have prevented the scandal altogether, however, had it proactively implemented a proper anti-bribery management system (ABMS). There is a solution that pharma and healthcare companies can implement to help prevent and detect bribery and corruption: the ISO 37001:2016 Anti-Bribery Management System standard. ISO 37001:2016 is designed to help global organisations implement an anti-bribery management system (ABMS), as the standard specifies a series of measures required by the organisation to prevent, detect and address bribery, and provides guidance relative to that implementation.

CRI Group’s ABAC Certification Services is fully accredited to offer independent ISO 37001:2016 certification to ensure that an organisation is in compliance with the standard, which is recognised and practised worldwide.  CRI Group’s auditors and analysts work with pharma and healthcare companies to develop measures that integrate with existing management processes and controls, and include:

• Adopting an anti-bribery policy
• Establishing buy-in and leadership from management
• Training personnel in charge of overseeing compliance
• Communicating the policy and program to all personnel and business associates
• Providing bribery and corruption risk assessments
• Conducting due diligence on projects, business associates and other third-party affiliations
• Implementing financial and commercial controls
• Developing reporting and investigation procedures

In the case study outlined above, having such an ABMS in place would have detected the red flags of bribery and corruption before the scandal was able to proliferate and cause so much damage to the company. Risk assessments, in particular, would have uncovered the lack of due diligence procedures and alerted organisation leaders to the trouble areas that were points of opportunities for the CFO and his brother-in-law. Also, having proper due diligence procedures in place to vet and uncover fraudulent third-parties would have detected the problem with this vendor from the outset.

Once certified, an organisation must continue surveillance and undergo a recertification audit over three years to ensure that the organisation still complies with the ISO37001:2016 standard. During this time, any changes to processes and any new relationships with vendors and other third-party partners are carefully reviewed.

Long-lasting benefits of ISO 37001:2016 certification

ISO 37001 provides a strong framework for addressing and isolating risk factors, and the benefits of certification are far-reaching, impacting not just the primary organisation but also influencing contractors, clients, and raising the profile of the company as an ethical entity that is a good trading partner.

By achieving ISO 37001:2016 certification, a pharma or healthcare organisation will ensure that the organisation is implementing a viable anti-bribery management system utilising widely accepted controls and systems. It will also assure management, investors, business associates, personnel and other stakeholders that the organisation is actively pursuing internationally recognised and accepted processes to prevent bribery and corruption. Today, companies cannot afford to be reactive to threats of bribery and corruption. By achieving ISO 37001 Anti-Bribery Management System certification today, an organisation will remain in compliance and better positioned to address risks head-on.

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, Due Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

Filed under: Anti-Bribery Anti-Corruption Solution, Compliance Solution, ISO 37001, Pharmaceutical & Healthcare, Resources by admin
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Risk management and its continuous improvement

Risk management requires continuous improvement. Without a company culture strongly aligned with principles of continuous improvement, organisations will struggle to implement, let alone maintain, successful risk management programs. This can be challenging in practice, as cultivating a risk management attitude within a company involves aligning risk initiatives with existing company values, policies and, to put it simply, convincing everyone involved that risk management is worthwhile. However, improving risk culture is possible, and, like many things, it becomes a lot easier when you have a process for it.

Such a process can be separated into three stages:

• Cultural awareness
• Cultural change
• Cultural refinement

Phase one: Building and strengthening cultural awareness

The first stage is building cultural awareness; this will take the form of communications, training, and general education initiatives within the organisation. Here is where companies set risk management expectations and objectives, define roles and responsibilities, and communicate all of these things with their employees. You shouldn’t expect your employees to conform to your ideas about risk management without first taking the time to educate and inform them, whether through formal training or access to knowledge base material or similar.

Successfully building and strengthening cultural awareness about continuous improvement includes:

• Establishing a common risk management vocabulary
• Making sure communications are consistent with said vocabulary and that everyone in the organisation has clear access to all relevant documents
• Being clear about risk management responsibilities and accountabilities.
• Launching and maintaining training programs, providing training support and guidance where needed and as required by different roles and responsibilities within the organisation
• Making sure onboarding processes adequately cover risk management.
• Making sure recruitment processes adequately cover risk management.

Phase two: Changing the way the organisation operates

Once a firm foundation of cultural awareness regarding continuous improvement has been established, it’s time to start thinking about how to gradually change how the organisation operates to reflect these values. This phase begins by recognising and rewarding employees for paying attention to risk and responding to risk in a way that challenges the previously established (pre-continuous improvement) status quo. These motivational systems, rewarding and penalising behaviour according to the established ideals of continuous improvement outlined in the early planning stages, will result in the gradual but certain shift towards a proliferation of continuous improvement-conscious company culture. Another important element is recognising the talent that conforms with the desired vision of continuous improvement and capitalising on this alignment by placing them accordingly in relevant, optimised positions of responsibility or seniority. It’s getting people in the right place to drive the right results.

Some important considerations for this phase:

• Utilising challenge as a motivator for driving cultural change
• Gamifying and quantifying risk performance metrics and rewarding/penalising behaviour accordingly.
• Considering risk management and continuous improvement culture in talent management approaches.

Phase three: Optimising and refining the cultural ecosystem

The third and final stage of cultural adoption of continuous improvement occurs once the company culture has matured to the point of widespread adoption and desired values are already well-entrenched. At this point, the focus shifts to monitoring performance versus expectations and attempting to tweak and refine the system to further improve cultural adoption. The expectations can and will be influenced by a wide range of stakeholders, not just top management; employees, a board of directors, analysts, customers, investors – they all have a say in the definition of cultural expectations because these expectations should directly reflect the whole entity that is the organisation, made up of all its constituent stakeholder parts.

Steps taken during this phase might include:

• Iterating feedback and observations from risk management into training, education, resources, and communications.
• Making sure stakeholders are held responsible for their actions
• Make sure any risk performance metrics or quantifiers are adjusted to reflect risk strategy, goals, and objectives changes.
• The capacity to redeploy and reassign individuals within an organisation according to desired risk culture goals
• Continually reflecting on and refining risk culture by continually changing business goals, objectives, and strategies.

At CRI® Group, we are committed to spreading the knowledge about the risk, compliance management and negative impact of fraud, bribery, and corruption to global businesses and promote transparent business relations across the world. As part of this effort, we want to present you our in-depth risk management and compliance insights – articles, whitepapers, eBooks, and other publications to help organisations overcome fraud, compliance, bribery, and corruption management challenges and tackle risks more effectively.

Don’t miss the opportunity to step up towards transparency and better protection for your business and your career – CRI® Group’s risk management and compliance insights give you a chance to explore these topics in-depth. If you are interested in our solutions, please click below to a free quote or contact us today.

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Filed under: All Industries, All Regions, Background Investigation, Due Diligence, Resources by admin
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Background Checks: An Essential Process

There are inherent risks in the hiring process, including deception by individuals seeking to gain an advantage over other candidates. Thorough pre- and post-employment background checks are critical in mitigating these risk factors, helping any organisation stay better protected from fraudulent candidates or unqualified employees.

The advantages of using an expert third-party service to conduct background checks are many. Comprehensive background checks are best performed by industry experts who understand where to find and confirm employee information, from criminal, education and employment history records checks to verification of credentials, training, certifications and other important info claimed by the employee or candidate. An international firm can access resources in geographic regions not serviced or accessible by typical “out-of-the-box” screening services.

Taking this approach puts protection in the hands of agents who are specially trained to use every resource available to provide timely and thorough pre- and post-employment background checks, adding a level of due diligence that allows you to focus on your core business needs. This is why any pre-employment background checks should dig deep enough (within all local laws and regulations) to assess every detail of a job candidate’s claims and credentials, to confirm that the claims match with the facts. An expert team should examine all of the following details of a potential employee:

• Identity: Some job candidates will actually fabricate a new identity, especially if they have something to hide. Proper screening can verify name, addresses, phone numbers, national ID numbers and other identifying information to confirm that they are who they claim to be.
• Credit checks and bankruptcy checks. As permitted by local laws, financial and credit history should be reviewed, as fraud statistics have shown financial distress to be a key red flag for fraudulent behaviour. Has the candidate claimed bankruptcy? Have they dissolved prior companies or are they faced with debtor filings?
• Previous employment verification. Background checks will verify past employers, locations of past employment, dates employed, salary levels, reasons for leaving, position titles, gaps in employment history and pertinent contact information.
• Education and credentials verification. Verification is needed to confirm school grades, degrees and professional qualifications.
• Criminal history. International criminal records searches are critically important, and should include any convictions for the applicant in the requested jurisdictions.
• … and more.

What gets uncovered serve both as cautionary tales and success stories. One client in the medical industry was hiring for a critical management-level position. After finding what appeared to be an exemplary candidate, they engaged thorough pre-employment

The candidate claimed to be a holder of a university degree, which, upon verification, turned out to be ‘fake and forged.’ The applicant also provided a reference letter, which turned out to be fake as well. In short, there was nothing legitimate about the candidate’s educational background. This person would have been a risk on all levels, including patient safety. The client dodged a very real bullet by applying proper background checks, and not hiring someone who was unqualified and untrustworthy.

Don’t take unnecessary risks with your business, assets, investments and reputation. Whenever you are hiring a new employee, conduct a thorough pre-employment background check, best implemented and administered by a third party. After all, a team that specialises in background checks will have a full bank of resources and experienced personal to do the job properly. Hiring new employees should be an occasion marked by excitement, not risk and uncertainty.

Let’s Talk!

If you have any further questions or interest in implementing compliance solutions, please contact us.

CRI Group has safeguarded businesses from any risks, providing investigations (i.e. insurance fraud), employee background screening, investigative due diligence, business intelligence,  third-party risk management, forensic accounting, compliance and other professional investigative research services. In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. Contact ABAC® for more on ISO Certification and training.

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Reference checking, 6 keys in the hiring process

Why Reference Checking?

Hiring more people within a company no matter the size can be a lot of effort, waste a lot of time and cost a lot of money so it is important to do it right, which means reference checking. As a large company, it is often the case that there will be an in-house HR team or outsourced company to deal with new employment and reference checking. As a smaller company, it is likely the managing director or office managers handle the process themselves. Companies are at risk of losing a great deal of money from not following the correct employment process. Below are a few recommendations on how you can create and run an effective pre-employment screening process.

1) Understand your risk profile

While lots of businesses have the brand and reputational risk among the leading reasons to conduct background checks, but all organisations have different types of risk. While organisations understandably wish to avoid bad publicity, risk profiles inevitably vary between companies and industry sectors. Other risk-profile considerations include whether the company has regulatory responsibilities to demonstrate due diligence in hirings, such as financial institutions and those working with sensitive or vulnerable people.

2) Implement a strong policy

A background check policy is important because it streamlines the collection, storage and dissemination of employee or applicant background information. When established protocols are in place, incidents of people making mistakes because they had to make a judgment call are reduced.

3) Make It Company-Wide

Create and apply background check policies across the whole company, even for senior management. On average, supervisors spend 17% of their time managing poorly performing employees. In the same survey, 95% of employers said that a poor hiring decision affects the morale of the whole team. Ensuring that the people you hire have the correct qualifications saves time and effort while preserving company spirit.[1]

4) Be Consistent

Pre-employment background screening must be consistent. Most negligence issues start from inconsistency in applying HR policies. Inconsistent enforcement opens the door to discrimination charges, and background screening is no exception.

5) What information can I search for?

Creating pre-defined service packages ensures that your screening policy will be consistently applied. Best practices basic packages includes the following:

• Address Verification
• Identity Verification
• Previous Employment Verification
• Education and Credential Verification
• Reference Check
• Media Check
• Criminal Record Check

6) Understand local and regional screening variance

When building your pre-employment screening program, it is critical to understand that not all countries take the same view of the availability and use of certain types of pre-employment screening information. Creating compliant data and background screening processes is a complex and evolving challenge for all organisations and one that is multiplied by every country involved. As an essential means to ensure the safety and quality of staff, employers need to ensure that their screening programs are right for their organisation and their candidates; transparent, consistent and proportionate by design; and capable of handling an increasingly globalised workforce and disparate regulatory requirements.

References:

[1] https://www.smartrecruiters.com/blog/best-practices-for-building-an-effective-compliant-background-check-policy/

Let’s Talk!

If you have any further questions or interest in implementing background screening solutions, please contact us.

CRI Group has safeguarded businesses from any risks, providing investigations (i.e. insurance fraud), employee background screening, investigative due diligence, business intelligence, third-party risk management, forensic accounting, compliance and other professional investigative research services. In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. Contact ABAC® for more on ISO Certification and training.

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Demonstrating Adequate Procedures with ISO 37001 ABMS Certification and Training

As the international outcry on bribery and corruption practices continues to tighten its grip around rogue players in the private and public business sectors, global organisations continue to ramp up their efforts to develop effective frameworks to prevent, detect and report bribery and corruption. And by fortifying their anti-bribery management systems, such organisations are further helping their cause as such systems can play a pivotal role in establishing “adequate procedures” as a compliance defense in the event of a bribery accusation.

“Adequate procedures” is a term made popular through the UK Bribery Act of 2010, which poses the potential of a company avoiding liability for failing to prevent bribery if that organization can demonstrate sound and established policies and procedures that deter individuals (inside and outside of the organisation) from partaking in questionable or corrupt conduct. A key challenge, though, is that “adequate procedures” takes on different meanings, depending on what country or jurisdiction one may reside.  Further, most enforcement agencies and government authorities offer little guidance that pinpoints what exactly “adequate procedures” means when considered as a possible defense in a legal proceeding.

Consider two international legislative provisions that offer “adequate procedures” as a possible legal defense consideration along with the most recent National Anti-Corruption Plan of the Malaysian Government, and discover how a newly adopted international standard can offer multi-national organisations specific guidelines in developing a globally accepted anti-bribery management system that may support most “adequate procedures” defenses.

UK Bribery Act of 2010

Under the UK Bribery Act, an “adequate procedures” defense would be considered during an investigation into a corporate failure to prevent bribery.  The Act provides commercial organisations with a defense to liability when commercial organizations can prove and demonstrate that they had in place proper procedures designed to prevent persons associated with them from undertaking bribery related conduct.

Consequently, corporations that are otherwise liable for violating the corporate failure to prevent bribery provision can escape criminal liability from the provision if they can prove that they had in place “adequate procedures” to prevent the relevant illegal conduct from occurring.  This defense is unique in that it contends that corporations are acting in good faith and taking proper precautions throughout the organization in implementing adequate compliance procedures, and subsequently can avoid being held criminally accountable for the failure to prevent bribery.  This defense is significant in that there is no such defense under the FCPA (see below) or most other foreign anti-bribery laws.

FCPA (U.S. Dept. of Justice)

While corporate compliance procedures are not considered in the liability phase of the FCPA, they are taken into account during the sentencing phase by the U.S. DOJ relevant to the FCPA.  The United States Sentencing Commission outlines through its Federal Sentencing Guideline Manual six factors — four aggravating and two mitigating — that a sentencing court must consider in determining the appropriate penalty on organizations convicted under the FCPA.  The existence of an effective compliance program is one of the two mitigating factors.  Subsequently, an organization convicted of FCPA violations can use the existence of an effective compliance program to potentially reduce a penalty against it.

Malaysian National Anti-Corruption Plan 2019-2023

Under Section 17A (3) of the Malaysian Anti-Corruption Commission act, if the commercial organisation is found liable under the corporate liability provisions, a person who is the director, controller, officer or partner of the organization, or a person who is concerned with the organization’s management affairs at the time of commission of an offense, is deemed to have committed that offense unless such person can prove that the corrupt act was committed without his consent or connivance and that he exercised due diligence to prevent that commission of the offense as he ought to have exercised with regard to the nature of his function in that capacity and the circumstances.

Hence, there is a need for the company to put in place “adequate procedures” as a defense in case there is proven corruption by the associated individual.  The Malaysian Anti-Corruption Commission MACC has issued guidelines which constitute “adequate procedures.” In the National Anti-Corruption Plan, Tun Dr. Mahathir bin Mohamad, Prime Minister of Malaysia on 29th January 2019 developed initiative number 2.1.3 which seeks “To introduce Anti-Bribery Management System (ABMS)MS ISO 37001 certification in all Government agencies”  within two years (Jan 2019-Dec 2020). The guidelines further state in initiative 6.2.4 “To propose Anti-Bribery Management System (ABMS) MSISO 37001 certification as a requirement for State-Owned Enterprises (SOEs), Company Limited By Guarantee (CLBG) and the private sector to bid for Government contracts”.

In complying with these guidelines and to prove “adequate procedures”, public and private sector organizations should implement the ISO 37001 certification process which would provide proper assurance that the organization has succeeded in establishing, implementing, maintaining, reviewing and improving its Anti-Bribery Management System.

Demonstrating “Adequate Procedures” through ISO 37001 Certification

ISO 37001 Anti-Bribery Management System is an internationally accepted standard that specifies the procedures by which an organization should implement in preventing bribery while detecting and reporting any bribery incident that occurs.

The standard requires organizations to implement these procedures on a reasonable and proportionate basis according to the type and size of the organization, and the nature and extent of bribery risks faced.  It applies to small, medium and large organizations in the public and private sector and can be implemented in any country.  Though it will not provide absolute assurance that bribery will completely cease, the standard can help establish that the organization has in place reasonable, proportionate and adequate anti-bribery procedures.

ABAC® Center of Excellence Limited is fully accredited as a Conformity Assessment Body (Certification Body) to assist your organization in attaining ISO 37001 certification through a thorough bribery risk assessment and audit covering the entire scope of the standard The audit methodology is evidence-based, meaning any issues raised will be confirmed through adequate evidence that the ABAC Certification team has discovered during the audit.

Auditing techniques take a risk-based approach to examining your organization’s Anti-Bribery Management System (ABMS), and the ABAC Certification team will increase the scale of the investigation if they determine that a specific process presents on a higher risk side.  Factors such as Impact, Negligence, Minor, Major, and Critical are taken into consideration during the audit.

A separate audit method is a process-based approach where the ABAC Certification examines the organization’s processes while considering the interaction between those processes.  Finally, there is a sampling-based audit approach where ABAC Certification incorporates an appropriate sampling plan utilizing samples from different ABMS processes to conclude and support the audit findings and results.

The audit is extremely thorough in its approach, which results in an accredited certification for the scope of the ISO 37001 Anti-Bribery Management System.  Because of the standard’s international acceptance and the thoroughness of the audit process, such certification can provide a valuable safeguard in demonstrating an “adequate procedures” compliance defense in cases posing a liability for a company’s failure to prevent bribery.

Indeed, from an FCPA perspective, certification may provide tangible evidence that a compliance program was in place at the time of the alleged bribery actions.  And from a UK Bribery Act perspective, the certification could provide the company with tangible prima facie evidence presented by an accredited certification body attesting to the establishment and effectiveness of the organization’s compliance program. Notably, per Section 17A of the Malaysian Anti-Corruption Commission act, the Prime Minister’s National Anti-Corruption Plan 2019-2023 has declared ISO 37001 certification a requirement for companies operating in Malaysia.

There is a strong likelihood that ISO 37001 Anti-Bribery Management System will continue to set the pace for a globally recognized “adequate procedures” standard for corporations embroiled in corruption litigation proceedings. But for now, the most powerful “insurance” tool that public and private sector organizations can use in their defense strategy is ISO 37001 ABMS certification.

ABAC Certification is an accredited conformity assessment body in issuing ISO 37001:2016 certification, and an independent component of CRI® Group’s Anti-Bribery Anti-Corruption Center of Excellence, which was created to educate, equip and support the world’s leading business organizations with the latest in best-practice processes and procedures, providing world-class anti-bribery and anti-corruption solutions to organizations seeking to validate or expand their existing compliance frameworks to maintain a competitive edge in the world marketplace.

Zafar Anjum, MSc, MS, LLM, CFE, CIS, MICA, Int. Dip.(Fin. Crime), CII, MIPI, MABI | CRI® Group & ABAC® CEO
t: +44 207 8681415 | m: +44 7588 454959 | e: zanjum@CRIGroup.com

Let’s Talk!

If you have any further questions or interest in implementing compliance solutions, please contact us.

CRI® Group has safeguarded businesses from any risks, providing investigations (i.e. insurance fraud), employee background screening, investigative due diligence, business intelligence,  third-party risk management, forensic accounting, compliance and other professional investigative research services. In 2016, CRI® Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. Contact ABAC® for more on ISO Certification and training.

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Human Capital can make (or break) your business – mitigating employee risk!

Most organisations manage some of their risks via an insurance policy and risk retention. However, this is a reactive strategy when it comes to risk. If you are one of these organisations, then you are missing the riskiest part of the equation: people risk.

People risk IS…

• having the wrong people in the right positions;
• the failure to understand brand;
• having a weak tone at the top that sets a little precedent;
• a leadership failure that trickles down;
• the uncontrollable side of what people do.

At CRI Group we see people risk as a hidden, budget-busting risk. We know that people and culture can influence (very negatively) your strategy. In other words, human capital can make — or break — your organisation. This risk directly affects your culture, brand, operational efficiency, and ultimately your profitability. In our view, effective leaders of people risk squash organisational inconsistency by living the brand.

Employee investigative analysis findings expose employee risk

Between February and March 2019, CRI Groups’ investigative analysis team found 3.6% of all requested degree checks to be fake. This is followed by the statistics from January-June 2020, indicating that claiming a fake degree occurred in nearly 2% of cases. Our investigative operations team also found this year that providing incorrect education degree details resulted in 2.33% of all checks. Overall, providing incorrect employment details is the most common red flag, as it was uncovered in about 4.5% of background screenings. Learn more statistics in our article, titled “Background Screening Red flags: Numbers Don’t Lie“.

With degree fraud becoming more common and sophisticated in style globally, comes an increased necessity for pre-employment degree checks to deter potential candidates from fabricating their level of experience and qualification, and to prevent the harmful consequences that employing such applicant’s can have on the company. With job seeking becoming more competitive, many employers are looking for degree level candidates to fill their positions and this means that for some candidates, falsely claiming the existence of their degree is an attractive idea[1]. This can come in the form of referencing to their bogus degree in their CV, or potentially even buying a false certificate from a fake or real university under a site which creates these certificates later down the line if the candidate’s fraudulent activity is not initially flagged up.

Of course, using these websites with the purpose to deceive employers, rather than for “novelty use” which the websites so often claim is the purpose of their product, is a criminal offence and can result in 10 years in prison within the UK, under the Fraud Act of 2006[2]. However, this seemingly hasn’t deterred the thousands of UK nationals who have purchased fake degree certificates with one person spending nearly £500,000 on the certificate[3]. According to a study conducted in 2014, one in three employers do not verify the candidate’s degree qualification upon their hiring, meaning that people are hired into positions they are neither qualified nor educated in, so also pushing those who are degree standard out of the chance of reaching the position[4].

One fake degree holder in a sensitive position can ruin the organisation due to significant irreparable reputational damage. Our pre-employment background checks capability thus acts as an effective employee risk mitigation strategy, so protecting your company from the “human factor”.

Mitigating Employee Risk

Where there are people, there are risks.  There are factors in employee-related risk management that are out of a company’s control. But just because you can’t prevent them from occurring doesn’t mean you can’t be prepared for them when they do occur. CRI Group has developed this playbook to help you understand how to mitigate employee risk. This playbook defines the risks, explains and identifies each and their impact. “Where there are people, there are risks: mitigating employee risk” provides actionable advice on how to take control within your organisation including information on background screening (pre-employment screening and post-employment background checks).

You secure their future. We secure their past.

How do you know the candidate you just offered a role to is the ideal candidate? Are you 100% sure you know that everything they’re telling you is the truth? 90%? They showed you a diploma, how do you know it’s not photoshopped? Did you follow the correct laws during your background checks process?

Mitigating employee risk is vital to avoid horror stories and taboo tales that occur within HR, your business or even your brand – simply investing in sufficient screening can save you time, money and heartbreak. CRI Group’s EmploySmart service provides in-depth background screening services of employees and candidates at all levels, from senior executives t

o shop-floor employees. Outsource your employee background screening to one of our experienced providers, trusted by the world’s largest corporations, and you will only ever have to look forward, never back.

[accordion_father][accordion_son title=”About CRI Group” clr=”#ffffff” bgclr=”#1e73be”]Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, Due Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.[/accordion_son][accordion_son title=”Sources & Credits” clr=”#ffffff” bgclr=”#1e73be”][1] https://www.theguardian.com/education/2002/apr/06/students.schools1
[2] https://luminate.prospects.ac.uk/7-ways-to-spot-a-fake-degree-certificate
[3] https://www.bbc.co.uk/news/uk-42579634
[4] https://www.agencycentral.co.uk/articles/2017-04/why-fake-degrees-are-destroying-recruitment.htm

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How to handle the “Human Factor”: Top 3 risks when hiring

Talent acquisition in the hiring process requires a great deal of investment in both time and effort for the hiring manager and would involve even greater repercussions if the chosen candidate turns out to be a bad hire. Due to the ever-growing competitive nature of job seeking, it is becoming increasingly likely that a prospective employee may embellish their CV, making themselves appear more attractive to the employer. When hiring new employees, the company becomes vulnerable to human capital risk, which is often thought as the most damaging threat to an organisation yet is also the least well-managed. Hence, performing the appropriate background screening before confirming the hire can save the company from unnecessary costs later down the line.

Top 3 risks when hiring new talent

1. False Credentials

It is thought that generally, around 40% of all job applications contain some fraudulent information, and such a high percentage hence displays the necessity for thorough background checks in the hiring process[1]. One of the most common lies tend to be extending dates of employment to hide a suspicious employment gap which the candidate wants to cover up. Similarly, claims of fraudulent degrees found are on the rise which is a great indicator that the candidate is in fact not qualified for the role. Other false credentials may include exaggerating daily activities in job roles or improving the job title. Other times you may expect to find fraudulent references, or at least references that are not suitable[2].

2. Breach of Trust

In addition to the risks that a hire with false credentials may impose on the company in terms of being unqualified for the role, the candidate’s willingness to lie on their résumé can be a strong indicator of an untrustworthy candidate. If they are willing to lie to reach their desired position, then what else may they lie about within the company?

With access to sensitive company information and documents, and company reputation on the line, hiring a person that can be trusted to perform their role is critical. For example, theft within a company is estimated at roughly 5% of revenues each year[3]. Hence, pre-employment background checks can also act as a judgment of character of the prospective employee for the hiring manager.

3. Negligent hiring and employer liability

As well as having a background screening process in place having the power to discourage untrustworthy candidates, pre-employment background screening conveys that the employer has exercised the necessary due diligence as a preventative measure to protect the company from legal harm. Pre-employment background checks can also check for criminal checks, social media checks and right to work checks; all areas in which an employer can become liable if the correct due diligence process hasn’t been conducted. An employer who hires a candidate without the right to work “can now be subject to a maximum civil fine of £20,000 per individual and/or a criminal sanction of an unlimited fine or imprisonment of up to 6 months”, Ben Mason- employment law associate at Aaron & Partners LLP[4]. Hence, background checks can reduce the likelihood of encountering risk later on.

A cost-effective risk-management tool?

According to the US Department of Labor, a bad hire can cost the company at minimum 30% of that employees first-year salary[5], whilst Fast Company says that one quarter of companies surveyed estimated that a bad hire cost them at least $50,000 in the past year[6]. Hence, pre-employment background screening is a cost-effective risk-management tool to help deter fraudulent candidates, mitigate risk to the company and protect the company from liability in the future. This keeps the company safe and acts as an effective risk management tool in providing integrity and confidence in hiring new talent.

Let’s Talk!

If you have any further questions or interest in implementing background screening solutions, please contact us.

CRI Group has safeguarded businesses from any risks, providing investigations (i.e. insurance fraud), employee background screening, investigative due diligence, business intelligence,  third-party risk management, forensic accounting, compliance and other professional investigative research services. In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. Contact ABAC® for more on ISO Certification and training.

References:

[1] https://www.forbes.com/2006/05/20/resume-lies-work_cx_kdt_06work_0523lies.html#5fd1c99c78b5
[2] https://www.thebalancecareers.com/do-you-know-who-you-re-hiring-1919148
[3] http://www.greenhouse.io/blog/4-risks-your-company-takes-when-background-checks-are-not-a-part-of-your-hiring-process
[4] https://www.personneltoday.com/hr/background-screening-eight-key-checks-employers-must-make/
[5] https://www.forbes.com/sites/falonfatemi/2016/09/28/the-true-cost-of-a-bad-hire-its-more-than-you-think/#652e877b4aa4
[6] http://www.greenhouse.io/blog/4-risks-your-company-takes-when-background-checks-are-not-a-part-of-your-hiring-process

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