MANAGING CORPORATE RISK AND COST – WHY IT IS ESSENTIAL TO SCOPE AN INTERNAL INVESTIGATION
Recent reports indicate that internal investigations into fraud or corruption and the costs associated with such probes is on the rise.
With corporate investigations now a common response to many instances of suspected misconduct – and the expected response by regulators, auditors and other stakeholders – what is best practice when it comes to an investigation? And how can organisations maximise their chances of getting the best outcome with as little disruption as possible?
The answer to these questions is simple: scoping. The importance of clear planning should not be underestimated. A lack of clarity as to the objectives, methodology and output of an investigation can have disastrous consequences: costs will escalate, there will be an increased disruption to business, and legal risk will increase as matters which would not otherwise require investigation are considered and reactionary decisions (regarding, for example, suspension, remuneration and market announcements) are made without proper deliberation.
At the same time, a clear scope that is deliberated and considered will help mitigate against the risk of criticism at a later stage around whether the investigation was thorough and independent or not.
Scoping an investigation is not always easy, of course, particularly when the matter alleged has potentially serious and wide-ranging legal consequences and there is a risk of it being leaked to the press – or, more commonly, leaked on social media.
Below are some first steps businesses should take as part of their initial response and scoping process once an allegation comes to light. Such an approach will pay dividends later as it will result in an effective and efficient investigation and minimal long-term disruption.
Jul-Sep 2022 Issue
Fox Williams LLP