One thing often overlooked by sole-traders and some small-to-medium business enterprises, is the need to conduct adequate risk assessments.
This approach is not only slipshod business practice, but is also inherently risky in itself; after all, your source of income, your family’s well-being, your reputation, public safety, your employees and other people who depend on the smooth uninterrupted activities of your business, even your personal freedom, may all be impacted by your failure to identify, assess and manage risks.
Not only should it simply be good business practice to ensure that your enterprise isn’t compromised by threats or vulnerabilities that ought to have been plainly evident and mitigated against, but one aspect of risk management will soon become a requirement for commercial organizations operating in Malaysia, is the need to regularly and comprehensively assess the nature and extent of risks relating to bribery to which it is exposed.
If you are already considering risk in your business, then it will not be much of a burden to extend that to corruption risks so long as you have a good understanding of the requirements of the Malaysian Anti-Corruption Commission Act of 2009, and the new requirements being placed on business owners and officers to be responsible for the acts of their employees and agents that will come into effect from June 2020.
It is that latter part of the new requirements that businesses, who may not have been concerned about corrupt acts or risks previously, will now have to start thinking about. Any director, controller, officer, partner or person concerned in the management of a company’s affairs will become liable for corrupt acts of their employees and agents, unless they have put in place adequate systems that demonstrate –
Undertaken control measures.
Systematic review, monitoring and enforcement measures.
Training and communication with its staff.
(source: Guidelines an adequate procedures, Prime Minister’s Department, Malaysia.)
Even a sole trader working with third party agents has a legal obligation to comply with the law.
And if you are not considering wider risk in your business activities, well, now would be as good a time as any to start.
Among the many risks that businesses face are ones arising from bribery and other unethical acts and these can involve customers, agents, suppliers, as well as staff. While the existing laws proscribe against, for example, your staff or agents receiving bribes, the new requirement will put the onus on business owners to prevent their staff and agents from paying bribes or other payments for favours (facilitation fees) to gain a business advantage of some kind.
Without robust anti-bribery systems in place to prevent this, these could put you in jail or at the very least liable for a stiff fine, or both. Then there are the threats to your business, brand and personal reputation that arise from the disclosure of corrupt acts involving your business, all of which are potentially business killers.
Another important aspect to look at this from is that of business development. If you are a small trader looking to engage with larger companies who are compliant with the law, or you wish to bid on government contracts, you need have your own compliance via adequate systems in place. If you do this sooner, rather than later, this will give you an advantage over those companies rushing to catch up.
Key Risk Consulting Asia, in partnership with Triune ABMS Advisor, have devised solutions for assessing processes, identifying weaknesses, assessing risks, and putting in place solutions to help sole-traders and SMEs comply with the law. These solutions include, among others, training to understand obligations under the law, due diligence on third parties, and help in devising robust anti-bribery practices and procedures for control, monitoring and review.
At the same time, we are happy to use our wide expertise to advise SMEs and sole-traders who may have thought until now that risk management was either unnecessary, to difficult, or too expensive for their operations; in identifying and assessing threats, and to work with you to identify realistic risk mitigation measures.
Many will say that their business activities are of such low level that failure of the business will not impact on anybody, but even if you are a sole-trader without any obligations of family and do not depend solely on the income from your business activity, your activities impact on others in ways you might not appreciate. How about your suppliers? Are you an important customer for them whose business failure could be a risk to them? How about the landlord of your business premises? Can they find another tenant to replace you immediately and what about the impact of loss of rental income on them if they cannot? How about your customers? Have they come to depend on your product or service continuing or being reliable?
It’s all too big a risk to take.