Role of Culture, Language and Traditions of Global Key Managers and Employees in Fraud Risk Management

For the purposes of building a solid fraud risk management project, organizations operating internationally must carefully consider the specificities of the individual cultures in which they operate; adapt their policies to local customs, laws and regulations; and monitor the controls and compliance of all locations where they do business. The cost of not properly considering the various cultures in which organizations operate, especially for multinationals, can be very high.

For multinational corporations, the three sides of the fraud triangle, in addition to a host of major threats, can present themselves. Companies often set expectations for growth and overseas expansion, creating pressure to meet aggressive targets, particularly in fast-growing markets. This could explain the tendency of key managers and employees in certain areas of the world who may tolerate certain mistakes made within an organization that they feel can be justified if they help the company survive an economic recession. This way of thinking is explained by the fact that, in certain areas of the world, the pressure to achieve business goals often leads to rationalization, a problem exacerbated by remote key managers who are often underexposed to messages from headquarters or management on standards of ethics and codes of conduct. 

As sociologists and criminologists suggest, the leaders of multinationals who wish to concretely promote a strong, coherent and ethical culture must do more than simply translate statements of their ethical principles and codes of conduct, or provide basic fraud training material in the various local languages where their establishments operate. If fraud risk management programs are not properly implemented and adapted to all operating locations, cultures and traditions, employees may perceive increased opportunities to commit fraud, which become heightened in parts of the world where perpetrators of frauds often are not affected. 

The risk factors for ethics worldwide are perceived and felt differently, depending on the various countries, traditions and cultures. Different customs and languages can pose challenges and threats to maintaining a consistent level of ethical behavior of the organization operating in various countries. Not only do organizations need to translate  codes of conduct and build fraud training programs into several local languages, but they also need to understand the various cultures in which the company operates by adapting their policies to local ones and monitoring controls and compliance through all the various countries. 

Some behavioral expectations, such as the prohibition of facilitating payments, could be more restrictive in an organization’s headquarters than what is normally acceptable in another jurisdiction on another continent. While whistleblowers in the United States are often rewarded in cash and celebrated almost as if they were movie stars, in other cultures of the world, the attitude could be perceived differently.

To adequately translate the tone at the top set at corporate headquarters, ethics, compliance, training and other communications should be adapted to local customs while retaining the original principles, and employees should be trained on specific laws and local, national and international regulations. Not only will proper training increase the necessary awareness of risk, but it will also provide employees with the self-confidence to continue to act ethically.

Today, according to the cultures of the various countries, what attitude and what culture do key managers and employees around the world have in the fight against fraud?