Investor? Demand your portfolio companies get ISO 37001 certified to reduce potential bribery risks
Investors in large companies should demand that their portfolio companies get ISO 37001 certified. It is the easiest method by which an investor can get comfort, knowing that potential corruption risks are minimised because the anti-bribery management system's controls are consistent with best practices.
Hold Companies Responsible
Investors, asset managers, or a private equity managers of portfolio companies should not be hesitant in demanding that their companies get ISO 37001 certified. This is particularly pertinent if the company is:
- Involved in high risk sales to government
- Engaged with high risk countries
- Using third parties and distributors for their distribution
- Selling products around the world
In short, they should be holding companies accountable for their compliance programmes. This means going beyond an annual review in a controlled set of slides from the CCO. Bringing in an independent authority to certify the programme according to a recognised standard is far more reliable, demonstrating the programme's effectiveness for all to see.
The certification needs to be conducted by an accredited certification body, ideally one that has expertise in anti-corruption. The certification process is then managed by this external body, with continuing investment needed to ensure that the company's ISO certification is maintained.
Value in Reducing Risk
The existence of a certification does not guarantee that your portfolio company won't have a corruption or compliance issue. What is does guarantee is that these issues are they less likely to occur, and in the event that it does occur, the company is in a better position to manage the fallout. Keep in mind that the likelihood of reputational or stock price damage occurring after suffering such an issue is high. The time it takes to recover and resolve any investigation will be years, potentially pushing into your existing strategy. This just further highlights the value of investing in certification NOW, reducing the chance that such damage will take place.
Given that your investments are often hundreds of millions and the cost to gain a certification is a mere 100k or less, the decision to manage the risks of corruption through a certification seems an obvious one.