In times of a financial, economical or even a health crisis the organisation’s internal controls are pressurised. It is normal that organisations need to adapt to rapidly changing circumstances. Think of cutting back on all kinds of costs, changing strategies or even closing down for a while due to a pandemic. Organisations switch to ‘survival mode’. However, species in ‘survival mode’ are not planning what to eat tomorrow and the day after. Organisations must balance the effects of short and long term measures on their internal controls. Especially, when it comes to their compliance programs. A few ‘reminders’ for organisations dealing with this issue:
- Internal controls are often ‘relaxed’ in times of a crisis. Why? The crisis and surviving it is the talk of the day. The danger of this focus is a ‘relaxation’ of governance processes, previous effective controls and oversight on employees & conduct.
- Fraud risk factors increase in times of a crises. Why? Organisations and individuals face more financial pressure, key internal controls weaken, the opportunity for fraud increases and people find it easier to rationalize their actions.
- The amount of SpeakUp® reports increase in times of a crisis. Why? Together with the organisation employees switch to survival mode. It is about safeguarding their lives, jobs and family.
- Crisis situations reveal weak links in internal controls. Why? Smooth processes and procedures are more important than ever. You do not want to lose revenues because of inefficient processes or procedures.
These reminders show the importance of a well established compliance programme. Keep in mind that establishing a well embedded integrity culture is a mission that takes years and is founded on trust of all stakeholders, but can be destroyed in a split second. Organisations need to think carefully about building and sustaining their integrity culture in times of crisis.