Knowledge & Insights
Risk management and due diligence insights, articles, reports, and resources
Due Diligence in a new world –
AI and automation in the post-Covid era
The COVID pandemic has changed the professional landscape in many ways. In this report, we examine how those changes have impacted the the role of pre-investment due diligence how AI-based automation can streamline the process while increasing accuracy.
Linkedin Lipstick –
Who’s Lying and How to Spot It
A LinkedIn presence has become essential. But when users can change their profiles at a whim, how much can we trust what we read? We used the latest in AI-powered background checking tools to review executive LinkedIn profiles, revealing just how reliable LinkedIn profiles can be in today’s world.
Political Contributions – Their role in executive due diligence and why it matters
Political contributions are never far from the headlines. The implication that political influence can be bought is always sure to stir up a Twitter storm. In this report, we explore the trends in individual political donations, why it matters for executive management, and what red flags to watch out for.
FROM THE BLOG:
Top-level management often represents the face of a company. In today’s society, where public scrutiny and opinions spread like wildfire, the integrity of a firm is not only affected by the organization’s performance, but it is intrinsically linked to the ethics and reputations of its senior executives.
Executive management is the heart of any company. Their leadership dictates its present operations and steers the way into the future. But what happens when that leadership is flawed? We look at some of the recent biggest unethical corporate scandals and how they might have been avoided.
High-end screening is a necessity, not a luxury, for people and organizations making investments, establishing partnerships, and hiring high-level executives. The reputational and financial risks of failing to know what you should have can be devastating.
AI is redefining business practices and enabling firms to achieve their overarching goals. In the financial industry, due diligence is a prime example of a business activity in which the application of artificial intelligence and machine learning can help firms actualize their objectives of absolute efficiency. By reducing natural human errors, eliminating manual inaccuracies, and automating internal operations to increase productivity, AI is transforming due diligence and investment risk analysis norms.
Many companies have made significant investments in preventing corporate crime and fraud, and yet, 47% of executives surveyed reported that their company had experienced white collar crime in the past two years. With the problem so prevalent, what can be done to further prevent white collar crime?
Harm to a company’s reputation can have a significant overall financial impact. While other forms of risk are easier to identify and mitigate against, reputational risk can appear random and impossible to prevent. Recent developments in AI-powered risk intelligence are changing that and making preventing reputation increasingly possible.
Getting caught by a company engaged in law-breaking or dishonest business practices has always been a risk in any investment opportunity. With high-profile cases such as Theranos still hitting the headlines, we ask what constitutes corporate fraud, how it is different from other forms of white-collar crime, and how you can reduce the risk of being duped.
Using personal judgment to conduct due diligence may not be the optimal way to make business decisions. Many psychological studies show how our decision-making capabilities are limited due to the biases that are inherent in human nature. While the phrase ‘“go with your gut” may have positive implications, in reality, it could be fueled by “confirmation bias” — with disastrous repercussions for investors and decision-makers.
Statutes, Screening, and Snapchat. A Look into How Social Media is Changing the Background Check Industry
The proliferation of social media into our daily lives comes as no surprise, and yet people who love to share what they’ve eaten for breakfast with the world are apprehensive about sharing what they post on social media with their prospective employers.
While not much has principally changed in terms of employers being accountable for their employees’ actions, the future of due diligence seems to be taking some interesting twists and turns.
Globalization leads to a competitive talent search worldwide due to the borderless nature of employment, and companies have demonstrated an increase in demand to engage in the pre screening process. Protecting company reputation, making optimal business decisions, and ensuring employee and customer safety are among the top priorities for global brands looking to maintain their long term positions in the market. In 2018, for the 11th consecutive year, HireRight reported that the most popular types of background checks include employment, identity, criminal searches, and education verification.
According to StatisticBrain research institute, employee theft is a crime that costs U.S. businesses $50 billion annually. On a global scale, the Association of Certified Fraud Examiners reported that the median loss to businesses due to employee and executive fraud is $145,000- or an aggregated $3.7 trillion annually. More specifically, a study by global specialist insurer Hiscox found that the financial services sector had the highest level of losses due to employment fraud across all industries. In 2016 losses were over $120 million. How can these alarming figures be avoided to prevent future devastating losses to businesses?
Although the due diligence and background check sectors seem to be particularly straightforward in operations (find out all you can about a candidate, use that information to make a go/no go hire or investment decision), there are many more intricacies and complexities than meet the eye. With the continuous dynamic changes in political, technological, legal, cultural, and essentially all realms of society, information overload is inescapable.
The Divided States of America. A look into the complexities of FCRA pre-hiring regulations across America
Selecting a new employee to join a company is no easy feat for a hiring manager. In this overly pressurized, highly competitive marketplace, managers are under intense scrutiny to ensure that they hire top talent individuals from the marketplace. Moreover, managers in the U.S. face a network of intricate and overwhelming complexities when it comes to hiring laws and regulations. While it may be called the United States (emphasis on the United), most states are quite divided about their policies toward conducting background checks and pre screening hiring procedures. Let’s examine some of those differences and see how they affect the due diligence process.
Artificial Intelligence is unarguably changing your life whether you’re aware of it or not. Health care, cyber security, energy, finance, and tech are only a few of the infinite numbers of industries and ways in which AI is transforming society as we know it.
Although the Gig Economy is not a new concept in the U.S., it has seen some significant growth in the last few years, not surprisingly due to technological developments. According to a 2015 study by the American Action Forum, the number of workers in the gig economy grew from 8.8 percent in 2002 to 14.4 percent in 2014.
Furthermore, independent contract workers grew by 2.1 million people from 2010 to 2014. The growth of the gig economy is sure to have first hand effects on the employment sector in more than one way.
Facebook, Amazon, Wells Fargo. These are companies that you would expect hire only the best of the best. But while their brand names may carry elite associations, their compliance practices are anything but superior. In the wake of corporate scandals, the list of fraudulent activities never seems to end—and some of the top Fortune 500 companies are no exception to the rule. Over the past ten years, employers and screening firms have had to pay more than $325 million to settle background check (or lack thereof) lawsuits. In this new social era of transparency, there seems to be conflicting interests between corporate trust and corporate unjust.
Recent trends show that it’s easier than ever to create fictional companies and returns, among other collaborating materials. In fact, a few months ago the SEC produced a fraudulent site to highlight just how easy it is to present the illusion of an up-and-coming, promising investment.
It is for that reason, among others, that we argue the uptick in fraud is correlated with the proliferation of data. And it’s directly affecting your due diligence.