Dear Peter,

I have read a lot about risk assessments in other words looking at the business with a view to working out corruption risk.

We’ve undertaken a review of our business from a high level perspective and identified key risks.

Should we do more?  Do you have any tips on risk assessment.

I’d like to keep it simple!

Peter’s answer:

Risk assessment is never an exact science, but it should be possible to tailor the process to the markets in which you are operating. A good starting point is the Transparency International country index, which gives a reasonable assessment of the level of risk you are likely to face.

Next I would look at your business model, who are you selling to and how substantial are the transactions.

Bigger transactions will generate a higher risk. Public sector is generally worse than private, business to business worse than business to consumer.

A simple matrix will provide a view on the level of risk, or a scoring system which eventually tots up to 100 for very high risk and 0 for little or no risk.

If you are selling directly to consumers in Denmark, you will by now have already identified that the risks are minimal and I suggest that you simply document this and start selling.

However, intending to sell major capital items or packages of services to public authorities into pretty much any African state should have rung lots of alarm bells.

The next stage would be to focus onto the particular market, is it negotiated or tendered, who manages the tendering process, what information is available on the internet about this market, what are the press saying, etc.

Much of this is common sense, but the higher the risk profile that you are creating then the more work you will need to do.

Based on the risk assessment you will need to decide on how or even if you can do business in this market. The how’s might include through a distributor, through an agent, direct selling, only on internationally supervised tenders, only via international NGO’s such as the UN or World Bank. Then you may need to select a suitable distributor, which raises another level of questions and due diligence.

As a final comment, I do understand the desire for simplicity, but all you can do is learn sufficient about the market and country to decide how simplistic you can be. Remember, if it all goes sadly wrong, then you will have to rely on this process against an adequacy test that will be applied with 20:20 hindsight.