KPMG has launched the first study of its kind into the risks companies take when they enter into new business relationships. Astrus Insights analyses some 8,000 integrity due diligence reports on third party relationships, covering 172 countries, which were undertaken for clients using KPMG’s Astrus enhanced due diligence and monitoring tool.
Some of the headlines from the research includes:
- The overall prevalence of risk is a concern: Over 90 percent of Astrus integrity due diligence reports on subjects across all sectors identified some kind of risk that warranted review. Almost one quarter of reports highlighted a significant, high level integrity risk.
- Fraud is the number one risk: Fraud is the most prevalent risk associated with third parties. We identified fraud risks more often than regulatory violations, bribery and corruption or money laundering. Fraud risk is not affected by geographical location, industry type or third-party activity: it is prevalent across all situations, including some likely to be deemed low or no risk by a basic risk assessment.
- Bribery and corruption is still a major risk: Bribery and corruption remains a key risk in certain sectors. It was a key factor in over 30 percent of reports across ENRC, Technology, Media and Telecommunications and Miscellaneous (general trading) sectors.
- Individuals present the greatest risk: We found that it is individuals, not entities, who carry the highest level of risk. Where reports were conducted on organisations, well over 80 percent of elevated risk ratings were caused by negative information on the shareholders and directors.