Globe world flags. Credit: niroworld-Fotolia

Businesses looking to evaluate the likelihood that inroads into a foreign market will result in a high risk of bribery now have an updated tool for making these determinations. The latest edition of the TRACE Bribery Risk Matrix from anti-bribery standard setting organization TRACE International was released Thursday.

Along with the new matrix came some new intel on which countries pose the most danger and which are the safest as far as avoiding bribery is concerned.

TRACE first issued its matrix in 2014, and the tool has been expanded this year to include a wider range of sources for its risk-score calculations. Scores for each country are calculated based on four factors: 1) the nature and extent of government interaction with the private sector; 2) the existence of anti-bribery laws and how they are enforced; 3) governmental transparency; and 4) the strength of civil society's ability to monitor and expose corrupt behavior.

“The overarching goal [of the matrix] is to get information to companies that will help them with their risk assessments,” said Alexandra Wrage, president and founder of TRACE.

“[Companies] are using it as a part of their algorithm as they start to figure out how much due diligence to do in a country, how much training to do in a country, how much auditing to do in a particular country,” she added.

This year's matrix named the top five riskiest countries to do business as Somalia, Venezuela, Turkmenistan, North Korea and South Sudan. Somalia was at the very bottom of the barrel with a score of 88 out of 100, with 100 being the most risky possible score.

On the other end of the anti-bribery spectrum were Sweden, New Zealand, Norway, Finland and the U.K., with Sweden as the least dangerous country for bribery with a score of 5 out of 100. Finland and the U.K. are newcomers to the top of the list this year.

Robert Clark, manager of legal research at TRACE, said in an email that the U.K.'s appearance in the top five has to do with an increase in the degree to which it publicizes laws and government data as well as the high ratings for the effectiveness of civil society oversight in the nation.

He said that the U.K. also “registered improvement with respect to bribery expectation and anti-bribery laws.”

Another notable takeaway from the report was that two of the world's most populous and economically dynamic countries, China and India, appear to be moving in opposite directions when it comes to bribery risk. China has become riskier on the matrix, explained Clark, while India has gotten less risky.

He attributed part of the increased risk in China to the country's reluctance to crack down outside its own borders.

“In the case of China, at least part of this has been they are not enforcing their anti-bribery laws outside the country so Chinese companies going overseas are not having Chinese laws enforced against them,” he noted.

Clark said that India has made improvements in the anti-bribery space both through a “super robust civil society” and a reduction in the sorts of red tape that can incentivize bribery and corruption. “India has had a sort of infamous bureaucracy for a long time, and they've made improvements on that,” he said.

So where does the U.S. fall on the anti-bribery matrix? The score this year was 17 out of 100. Wrage said that there could be shifts in the way anti-bribery laws are enforced with the new administration in the White House, but it's too early to come to definite conclusions or for changes to be accurately reflected on the TRACE matrix.

Globe world flags. Credit: niroworld-Fotolia

Businesses looking to evaluate the likelihood that inroads into a foreign market will result in a high risk of bribery now have an updated tool for making these determinations. The latest edition of the TRACE Bribery Risk Matrix from anti-bribery standard setting organization TRACE International was released Thursday.

Along with the new matrix came some new intel on which countries pose the most danger and which are the safest as far as avoiding bribery is concerned.

TRACE first issued its matrix in 2014, and the tool has been expanded this year to include a wider range of sources for its risk-score calculations. Scores for each country are calculated based on four factors: 1) the nature and extent of government interaction with the private sector; 2) the existence of anti-bribery laws and how they are enforced; 3) governmental transparency; and 4) the strength of civil society's ability to monitor and expose corrupt behavior.

“The overarching goal [of the matrix] is to get information to companies that will help them with their risk assessments,” said Alexandra Wrage, president and founder of TRACE.

“[Companies] are using it as a part of their algorithm as they start to figure out how much due diligence to do in a country, how much training to do in a country, how much auditing to do in a particular country,” she added.

This year's matrix named the top five riskiest countries to do business as Somalia, Venezuela, Turkmenistan, North Korea and South Sudan. Somalia was at the very bottom of the barrel with a score of 88 out of 100, with 100 being the most risky possible score.

On the other end of the anti-bribery spectrum were Sweden, New Zealand, Norway, Finland and the U.K., with Sweden as the least dangerous country for bribery with a score of 5 out of 100. Finland and the U.K. are newcomers to the top of the list this year.

Robert Clark, manager of legal research at TRACE, said in an email that the U.K.'s appearance in the top five has to do with an increase in the degree to which it publicizes laws and government data as well as the high ratings for the effectiveness of civil society oversight in the nation.

He said that the U.K. also “registered improvement with respect to bribery expectation and anti-bribery laws.”

Another notable takeaway from the report was that two of the world's most populous and economically dynamic countries, China and India, appear to be moving in opposite directions when it comes to bribery risk. China has become riskier on the matrix, explained Clark, while India has gotten less risky.

He attributed part of the increased risk in China to the country's reluctance to crack down outside its own borders.

“In the case of China, at least part of this has been they are not enforcing their anti-bribery laws outside the country so Chinese companies going overseas are not having Chinese laws enforced against them,” he noted.

Clark said that India has made improvements in the anti-bribery space both through a “super robust civil society” and a reduction in the sorts of red tape that can incentivize bribery and corruption. “India has had a sort of infamous bureaucracy for a long time, and they've made improvements on that,” he said.

So where does the U.S. fall on the anti-bribery matrix? The score this year was 17 out of 100. Wrage said that there could be shifts in the way anti-bribery laws are enforced with the new administration in the White House, but it's too early to come to definite conclusions or for changes to be accurately reflected on the TRACE matrix.