A conflict of interest is understood to be the situation in which the interests of the organization and the interests of the people employed in this (normally those in senior management positions, although this phenomenon can occur at any level within the organization) they are not in harmony. Conflicts of interest usually have their cause in personal relationships or financial interests.
Identify the conflict of interest
To identify the situations in which the risk of conflict of interest may arise, it is important to understand that Any person within the organization will be exposed to such a situation, regardless of their position in the organization, including management personnel or Senior Management itself. Now, depending on the place that the person involved occupies within the organizational chart, the severity of the materialized risk will be different.
Although it is important to differentiate the risk of corruption from the risk of conflict of interest, it is no less true that A poorly managed conflict of interest can lead to an act of corruption.
Conflicts of interest that are poorly identified or not managed correctly can call into question the existence of the compliance culture within the organization. Furthermore, as a consequence, it could pose a risk to the integrity of the company, as well as the person involved in question.
From all of the above, the importance of a effective identification and management of conflicts of interest by the Compliance function. If conflicts are not managed properly, certain risks could materialize such as fraud, bribery, corruption, money laundering or possible poor marketing of products.
Prevent conflicts of interest
It is essential to understand that these types of conflicts are not easy to avoid. Precisely for this reason, it is of vital importance try to prevent the consequences and to eliminate some of the factors that give rise to conflicts of interest. Hence the importance of implement good practices or certain guidelines that should be encouraged within the organization.
Examples of these good practices are: the maintenance of a record of conflicts of interest in the organization, the remuneration of employees in a way that conflicts of interest are necessarily avoided or, as one of the most necessary control mechanisms that we can mention , the formalization of a Conflict of Interest Policy.
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