Compliance professionals have many factors to consider when assessing the bribery risk of their companies’ proposed investments or engagements globally. Industries have different dynamics, companies have different business models, and business partners and intermediaries have different relationships and backgrounds.
Alongside these factors are the particular risks presented by a given country. The idea that anti-bribery risk assessment should include consideration of the national context is well established, and may even appear self-evident. Country risk is among the factors specifically highlighted as relevant by enforcement agencies in both the United States and the UK.
While the importance of country-level risk is widely understood, its assessment remains a challenge. National contexts are deeply nuanced, and a robust measurement of a given country’s risk should reflect that. Since 2014, TRACE International has worked to address this challenge with its publication of the TRACE Bribery Risk Matrix, the most recent edition of which was issued Thursday.
By providing not only a top-level summary score for each country but also scores for the varied factors that contribute to bribery risk — including the degree of opportunity for bribery solicitation, the strength of deterrence efforts, governmental transparency and civil-society oversight — the Matrix attempts to go beyond reductive rankings and to explore the diverse profiles that country-level risk can assume.
This exploration is an ongoing effort. As previously reported on the FCPA Blog, TRACE has made a concerted effort over the past year to work with leading anticorruption scholars to better understand the nature of bribery risk and how it can be more helpfully assessed. And while building that understanding is a long-term project, our working group’s insights have led to some more immediate improvements to the Matrix methodology.
For example, our review of past assessments has suggested to us that a country’s anti-corruption laws as such have little bearing on its overall risk profile. We found instead that in assessing a country’s ability to deter bribery, it was more helpful to consider a “softer” aspect of enforcement — the less formal ways in which a society’s attitudes and practices can serve to dissuade corrupt behavior. We’ve accordingly replaced our earlier “Proscription” subdomain with the new category of “Dissuasion.”
Being able to see how the Matrix domains and subdomains are constructed can go a long way toward helping interpret and improve the associated scores. So, as another addition to the Matrix this year, we have created the Matrix Data Browser, a free and public online tool that allows users to observe not only how each country ranks along each dimension of assessment, but how each data point contributes to those assessments, and to study the historical trends and relations between each of the variables underlying the Matrix calculation.
Moving forward, we will continue to probe the subtleties of measuring international business bribery risk. We are particularly interested in understanding how different factors may have different effects — stronger or weaker, beneficial or detrimental — based on varying societal, political, economic, or geographic conditions. In the meantime, we hope this new edition of the Bribery Risk Matrix and the availability of the Matrix Data Brower will encourage increased exploration of the nature and causes of business bribery risk, the better to strengthen ourselves against it.
Robert Clark is the Manager of Legal Research at TRACE International, where he oversees a team of lawyers responsible for the production of analytical content.