It’s that time of year again when chief compliance officers, chief risk officers, and in-house counsel are gifted with TRACE International’s annual Bribery Risk Matrix, a free resource for assessing the level of business-related bribery risk in countries around the world.
Anti-bribery standard-setting organization TRACE International first launched its Bribery Risk Matrix in 2014 to meet a need in the business community for more reliable information about commercial bribery risk worldwide. “The TRACE Matrix provides multidimensional, actionable insights about business bribery risk that can be used by companies to develop more targeted compliance procedures,” said TRACE President Alexandra Wrage.
To arrive at each country’s score, the matrix analyzes four specific areas (domains) where bribery is known to flourish: the nature and extent of government interaction with the private sector; societal attitudes toward bribery and the government’s ability to enforce its prohibition; the degree of governmental transparency; and the ability of civil society to monitor and expose corruption.
New in this year’s 2019 Bribery Risk Matrix is the Bribery Risk Typology, which groups jurisdictions based on factors that have been identified as having a significant effect on the bribery risk environment at the national level, including state fragility, resource wealth, enforcement, and economic size and complexity.
“The new Bribery Risk Typology presents practical context helpful for interpreting TRACE Matrix scores,” Wrage said. “For example, fragile states with autocratic regimes can be expected to present a different set of concerns than stable, economically complex democracies. The Bribery Risk Typology allows users to draw more meaningful conclusions than would be possible from a simple global ranking.”
Among the 200 jurisdictions ranked in the 2019 TRACE Bribery Risk Matrix, those that posed the highest risk of commercial bribery overall include Somalia, with a risk score of 94; South Sudan (92); North Korea (86); Yemen (85); and Venezuela (85). The countries that present the lowest risk of commercial bribery include New Zealand, with a risk score of 4; Norway (7); Denmark (7); Sweden (8); and Finland (9). These rankings align closely with last year’s Bribery Risk Matrix.
The United Kingdom and the United States also fared well, ranking sixth and 15th, respectively, with overall risk scores of 11 and 18. The United States was ranked 18th with a score of 21 in 2018.
Domain 1. Breaking down the highest and lowest rankings per domain, the TRACE Matrix found among all countries, New Zealand posed the lowest risk of bribery in Domain 1 concerning interactions with government, as it did in last year’s matrix.
Digging a bit deeper beyond the highest and lowest rankings, other countries with low bribery risk scores in Domain 1 include Hong Kong (6), Singapore (7), United Arab Emirates (7), and Denmark (9). Those that pose a high risk of bribery in Domain 1 and, thus, have many government touchpoints, include Venezuela (100), Bermuda (97), and Somalia (96), and South Sudan (95).
Domain 2. Denmark showed the lowest level of commercial bribery risk concerning the quality of its anti-bribery deterrence and enforcement, whereas North Korea (with a risk score of 100) showed the highest level of risk. Other countries that scored well in this domain include Luxembourg, Singapore, Netherlands, Norway, and Finland. Besides North Korea, other jurisdictions that scored poorly in this domain include Somalia (88), Chad (87), and Equatorial Guinea (86).
Domain 3. Concerning the level of government transparency and civil service, Sweden, New Zealand, and Norway received the highest score, whereas Eritrea received the lowest score. Other countries that scored among the highest for government transparency and civil service include the United Kingdom (4), Finland (5), Netherlands (5), Canada (6), United States (7), and France (8). Others that scored among the worst in this domain include Somalia (98), South Sudan (97), Yemen (93), and Guinea-Bissau (93).
Domain 4. Countries that boast the highest capacity for civil society oversight, ranking in the top two in this domain, are Denmark and Norway. Countries that scored especially poorly include North Korea, Eritrea, and Burundi.