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Compliance in Emerging Markets: Risk Assessment (Part 1)

By GAN Integrity (Updated )

From China to Brazil, Morocco to Russia, emerging markets are extremely important to established companies, because of their potential for growth and the many new business opportunities they represent. While tapping into these markets promises big benefits to global organizations, those benefits come with additional challenges and risks, particularly in terms of corruption and bribery. In this blog series, we explore three steps to effective compliance in emerging markets.

3 Steps To Effective Compliance In Emerging Markets

Corruption and bribery are far more common in certain emerging markets, which increases an organization’s risk of violations. Fortunately, these risks can be mitigated through an effective compliance program. Since each emerging market is different, here are three steps to help you carefully assess your target country or region and implement your compliance program: 

  1. Identify the challenges and risks of your market.
  2. Map out the risks for your business model in your industry (see Part 2 of this blog series).
  3. Implement an effective compliance program for the specific market (see Part 3 of this blog series).

Step #1: Identify The Challenges And Risks Of Your Market

Doing business in China presents very different compliance risks than doing business in Brazil. Before thinking about concrete compliance measures, you need to know exactly what situations and risks you are likely to face. The term “emerging markets” is deceptively broad, in that it includes large and relatively small markets, and countries with very different challenges. Compliance challenges for doing business in emerging markets may range from political instability, an underdeveloped infrastructure, uncertain legal situations or even cultural differences that support corrupt practices, such as the common use of Wasta (Arabic term for middlemen) in countries in the Middle East and North Africa. In terms of the legal situation, for example, a country may have outdated laws that are no longer enforced by the courts, or very new laws that have not yet been clearly interpreted. In either case, these grey areas may present obstacles to developing best practices for compliance. 

The fastest and easiest way to familiarize yourself with the corruption risks of your targeted country or region is to explore the free country reports provided by the Business Anti-Corruption Portal. Other possible sources of information include government and embassy websites. While these other, more general sites may provide advice on investing abroad, the Business Anti-Corruption Portal is the only resource providing reports that address specific corruption risks companies may encounter when investing abroad.

Want to learn more? In Part Two of this blog series, you’ll learn about mapping out the risks for your business model in an emerging market. In Part Three, we’ll explore how to implement an effective compliance program for your specific market. 

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