Companies in the energy and natural resources (ENR) sector face an increasingly complex operating environment around the world, not least in the field of compliance – and especially in the area of anti-bribery and corruption (ABC).
As ENR companies push further into lesser known geological regions, risks proliferate and become more difficult to measure. Companies are continuing to expand into a growing number of countries whose politics and societies make it exceedingly difficult to calibrate an effective ABC compliance framework. Falling commodity prices have exacerbated the challenges faced by compliance functions as they compete with other parts of the business for scarce funding.
Two factors are creating new compliance risks for ENR companies. First, a growing number of governments around the world are tightening ABC regulations or introducing new ones. Second, as companies globalize their operations, they rely more heavily on third parties than before to do business in far-flung parts of the world, often in areas where there is a high risk of corruption.
The potential cost of failing to comply with ABC regulations somewhere in the world is significant: sizeable fines, the possibility of imprisonment, and the loss of corporate reputation. But it is expensive to create a framework to prevent, detect and respond to corruption. At a time of weak commodity prices, ENR companies face severe cost constraints in implementing, maintaining or enhancing a framework to mitigate the risk of non-compliance. However, by taking the correct approach to the problem, organizations are able to develop a fit-for-purpose compliance framework that manages the risk without breaking the bank.
In order to assess the risk of ABC compliance, KPMG conducted a survey of 659 executives in a range of functions and industries from around the world.Fifty-four (8 percent) of these work in the ENR sector (of whom 38 work in oil & gas). All were asked a series of questions about the most challenging aspects of ABC compliance, and the oil & gas executives were given additional questions specific to their industry. The findings presented in this report are taken from the responses of: the oil & gas industry; the ENR sector including mining; and all 659 executives.