Business Bribery Risk Assessment

Business Bribery Risk Assessment

Karlyn D. Stanley
Elvira N. Loredo
Nicholas Burger
Jeremy N. V. Miles
Clinton W. Saloga
Copyright Date: 2014
Published by: RAND Corporation
Pages: 76
https://www.jstor.org/stable/10.7249/j.ctt14bs4dc
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  • Book Info
    Business Bribery Risk Assessment
    Book Description:

    Businesses operating overseas have inadequate tools for assessing business bribery risk and their potential risk of violating various anti-corruption laws. This report introduces a new index, the TRACE Matrix, for business bribery risk assessment. The index provides a quick and useful guide for businesses operating overseas based on a conceptual model of bribery risk and supported by data specific to firms.

    eISBN: 978-0-8330-8937-3
    Subjects: Law, Sociology

Table of Contents

  1. Front Matter
    (pp. i-ii)
  2. Preface
    (pp. iii-iv)
  3. Table of Contents
    (pp. v-v)
  4. Figure and Tables
    (pp. vi-vi)
  5. Summary
    (pp. vii-viii)

    Corruption is a major problem that can inhibit global business investment, especially in emerging markets, but assessing risk is challenging. Moreover, multinational companies often rely on tools for judging business bribery risk that are not well suited to their specific needs. As a result, their compliance practices may not be sufficient, increasing the potential risk of violating various anti-corruption laws, or may be overly aggressive and costly. We have created a new index, the TRACE Matrix, for business bribery risk that we believe has important advantages over existing alternatives. The TRACE Matrix provides a quick and useful guide to global...

  6. Acknowledgments
    (pp. ix-ix)
  7. Abbreviations
    (pp. x-x)
  8. 1. Introduction
    (pp. 1-9)

    Corruption is a significant challenge to global businesses, especially in emerging markets. In the past ten years, there has been an upsurge in prosecutions under the Foreign Corrupt Practices Act (FCPA or the Act) brought by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), an increase in findings of individual liability for senior corporate officials, and large increases in the amounts of fines and penalties levied on corporations. The cost and scope of FCPA corporate compliance programs have also increased. Yet multinational companies often have inadequate tools for judging business bribery risk; they frequently rely...

  9. 2. Development of the Business Bribery Risk Index
    (pp. 10-18)

    This chapter explains RAND’s work to develop a bribery risk index specific to the needs of the business community. We first discuss the challenges of measuring corruption risk that motivate the approach we took to developing the business bribery risk index. We then outline the conceptual model that underpins the TRACE Matrix and the domains and subdomains of risk that support the conceptual framework. We then turn to data: our approach to selecting indicators to support our conceptual framework and the analytic methods we use to aggregate information into an index. Although the TRACE Matrix is not the first index...

  10. 3. Results
    (pp. 19-25)

    When we combine our conceptual model, data sources, and data aggregation approach, we arrive at the final product: a series of country-specific business bribery risk scores.65Each score potentially ranges from 1 to 100, with 100 indicating higher business bribery risk. For each country, there are nine subdomain scores, four domain scores, and one total risk score. In this chapter, we will provide a discussion of the overall business bribery risk score and explain why it is important to also consult a country’s domain and subdomain scores. We will present the results for the ten highest-risk countries and the ten...

  11. 4. Conclusion
    (pp. 26-27)

    In this report, we have introduced the problem of global business bribery, discussed international efforts to combat it, reported business views, and explained the new business bribery risk indicators we have developed and modeled to create a new business bribery risk assessment tool. The problem that our research has addressed is that bribery of foreign government officials is prohibited by the FCPA and other international anti-corruption laws, but businesses have inadequate measures to assess this risk on a country-specific basis. DOJ, SEC, OECD, and UK Ministry of Justice guidance demonstrates the importance of creating individual country risk assessments and developing...

  12. Appendix A: Stakeholder Interviews
    (pp. 28-33)
  13. Appendix B: Outline of Domains, Subdomains, and Data Sources
    (pp. 34-37)
  14. Appendix C: Statistical Model Methodology
    (pp. 38-40)
  15. Appendix D: Results
    (pp. 41-57)
  16. Appendix E: List of Reviewed Data Sources
    (pp. 58-60)
  17. Appendix F: TRACE Matrix Country Rankings
    (pp. 61-62)
  18. Bibliography
    (pp. 63-66)