The top risks identified in our recent survey of risk and coverage issues for directors were:
- Regulatory and other investigations and enquiries
- Criminal and regulatory fines and penalties
- Anti-corruption Legislation (including the UK Bribery Act)
- Employment practices claims (harassment, age and sex discrimination)
- Risk of being sued abroad
What do you get if you put 4 out of 5 of these risks (all but employment practices claims) together, stir vigorously and add a pinch of regulatory zeal? The answer is a perfect storm of cross-border cooperation between regulators and extra territorial reach of new anti-corruption legislation.
The most recent example of this is the UK Bribery Act. The act is under the auspices of the Serious Fraud Office (SFO), which, anxious to make a case to the UK Government for its continued existence, will wish to find early promising targets for its new-found powers. There is not likely to be any shortage of candidates.
As my recent blog made clear, the risks here for directors are not restricted to direct prosecution for corruption. In casting their nets more widely, the UK and US authorities (under the Foreign Corrupt Practices Act) are able to avail themselves of more effective cooperation agreements with other international regulators than ever before.
In Asia for example, regulators such as the Securities Commission in Malaysia, the Monetary Authority of Singapore and the Securities and Futures Commission in Hong Kong, vie with each other to demonstrate their determination for zero tolerance to financial crime. Also the recent Siemens prosecution announced in Argentina, coming as it does after the company’s well publicized earlier problems in this area, shows that lightning can strike more than once for a large global company.
|This post was part of the special feature about What Risks Will Emerge in 2012?, published January 24, 2012. The feature also covered emerging risks in these other fields:|
Power & Utilities
Supply Chain Interruption