How To Steer Clear Of Perfectly Preventable Business Risks

Business Risk Due Diligence

Here’s the secret to outperforming your competition in the years ahead…

Making sure you invest in identifying and responding quickly to any potential threats to your company’s financial security before they happen.

It’s only by considering all possible business risks in advance that you will be able to control any future problems and keep risk to your company as low as possible.

This is especially true when it comes to effectively managing the potential impact of changing geopolitical and regulatory risks.

In order to carefully navigate through potentially hazardous waters, you must spot and steer clear of dangers as they present themselves. Identifying and mitigating risks before they occur is essential in today’s global marketplace.

That means actively monitoring your geopolitical risk environment in every type of business scenario so you can be proactive enough to prevent any negative outcomes and decide on the best next steps.

If you are planning a Merger & Acquisition (M&A) in a market unknown to you, then proper investigative due diligence is needed to make sure there are no political risks that could derail your market entry strategies. A routine background check won’t detect secret, hidden, and undisclosed information involving people at the most senior levels of your new company. The same is true for companies that you acquire.

Medical waste-disposal company Stericycle grew rapidly in Latin America through acquisition, without any centralized oversight of their accounting processes. This ultimately led to FCPA anti-bribery and records charges with Stericycle having to pay the SEC around $84 million in fees and another $17 million to regulators in Brazil.

There’s no need to find yourself in a similar situation with your next M&A. Proper due diligence from Infortal on the acquisitions and executives could have saved Stericycle millions.

Our Open Source Intelligence (OSINT) investigations are able to dive deep into financial and legal issues, relationships with other companies and entities, reputation issues, shell company involvement, evidence of fraud, signs of money laundering, financial impropriety, conflicts of interest, anti-competitive behaviors and numerous other issues…before you move forward on any deal.

It’s especially important to keep in mind that what may be socially and legally acceptable in one location may not be legal in another.

CLE Accredited Courses

Infortal’s Continuing Legal Education (CLE) courses are designed to equip executives, attorneys and risk managers with strategic insights to navigate the complex landscape of geopolitical risk. We cover topics such as international sanctions, regulatory risks, corporate espionage, AML, global warfare, anti-terrorist financing and corruption.

We can help you make informed decisions and mitigate potential risks for your business.
LEARN MORE   

That’s why our “on the ground” intelligence is needed when operating in a foreign domain, especially as your business will still be accountable for adhering to the FCPA and other applicable laws if you have management or financial activity through the USA.

This deep dive due diligence lets you know exactly who you are about to do business with and stops you from working with “bad actors” and fraudsters willing to commit bribery, fraud, or other criminal acts.

Especially with FCPA violations being at an all-time high and the introduction of additional enforcement actions, it is more important than ever to proactively incorporate due diligence investigations into your company’s strategy for success and to protect the board as well as the company’s profits.

Executive due diligence investigations will reveal far more information than a simple background check which is typically very limited in scope. Infortal specializes in Finding Bad Actors™ and rogue players to reduce your business risk exposure.

The chances of Finding Bad Actors™ on your own is low, because this is not typically part of legal or financial due diligence. Routine background checks which will reveal less than 1% of serious issues!

Infortal’s investigative analysis looks at both public records and also conducts a deep, dark and historical web search or OSINT (Open Source Intelligence) investigation, looking for anything that could cause potential embarrassment or serious risk exposures to your company.

It’s not enough to just check a global watch list which only tells you who is on someone’s radar in a given region for an existing issue. You also need to know if you are doing business with a person or business who has already been sanctioned. These lists will not inform you about ongoing corruption issues or future concerns.

If Infortal discovers someone on a global watch list, we don’t stop there. We start where all of these big databases stop and we investigate even deeper to find out if a company or person has a history of criminal activity, civil litigation issues, regulatory sanctions, important business conflicts, ownership in other entities, hidden and undisclosed information, or other compromising behavior which may come back to haunt your deal.

Our investigative analysis examines and triangulates all the available data to give you a truly comprehensive picture of your business risks before you make any decisions to move forward.

Failure to conduct such effective due diligence can lead to reputation damage, stock price drops and shareholder lawsuits, profit loss, staggering regulatory fines, and even a loss of freedom for your key executives.

Similarly, it’s important to understand exactly who the true owners are of the business you are dealing with. And you will face an even bigger challenge trying to determine if there are any Beneficial Ownership issues with a non-publicly traded company, especially if it is international.

You don’t want to wake up to the shock of discovering that the people you have been interfacing with are not actually the ones who own the company you’re about to acquire – especially if those hidden behind the scenes have a lot of problematic issues surrounding them. You might even discover too late that there were legal issues which impact going into business with them to begin with, or issues which may surface later that cause serious financial impacts.

That’s where the Infortal’s expert OSINT and in depth analysis come into play to help you see though any potential shell companies or bad actors that a standard investigation will not have the time to properly uncover. This same deep due diligence will also help you avoid any potential Reputational Damage or Litigation Risks in your future business dealings and transactions.

That’s because potential litigation risks are typically quite hidden. For example a company may trade under several business names and if you do not check these you may miss that the company has outstanding civil litigation or even criminal issues, and you may not find out that the executives will be tied up in litigation matters…or worse. If you don’t know for certain who you are doing business with, you could end up making a deal with a bad actor executive with a history of suing everyone they do business with. Similarly, if you don’t completely understand the legal frameworks you are about to engage in, you leave yourself vulnerable to the possibility that what is legal operations in one place is completely illegal in another.

If you are not looking at the right indicators, you could also miss any potential Credit Risks if a country is going to default on its bonds or debt payments to creditors. This can cripple your business with extremely high interest rates, plummeting exchange rates and the complete loss of your firm’s market capitalization.

The key to mitigating all of these potential business risks is to cast a very wide net through the use of open source intelligence tools to gather and analyze all publicly available information to have the fullest picture possible of any future business deal or transaction. Infortal is one of the few companies with the tools and experience to conduct the deep dive investigations necessary to expose any serious business risks that may be hidden or undisclosed.

M&A Transactional Due Diligence

Here’s an alarming statistic to be aware of if you’re planning a merger or acquisition (M&A) in a new market, especially if it’s overseas…between 70% and 90%.

FCPA Compliance

Here’s some news you should take very seriously.

As of August 2022, there are around 100 Foreign Corrupt Practices Act (FCPA) investigations ongoing. 

OSINT

Did you know that 35% of the supply chain vendors for global corporations around the world have bribery and corruption related issues?  And that most will never be detected until it’s too late?

Business Risk Management
Infortal provides clients with a broad spectrum of business risk management and due diligence services that enhance risk assessment and optimize strategic business decisions globally, with emphasis in high-risk and emerging markets.

Our team is available to assist

CLE Accredited Courses

Infortal’s Continuing Legal Education (CLE) courses are designed to equip executives, attorneys and risk managers with strategic insights to navigate the complex landscape of geopolitical risk. We cover topics such as international sanctions, regulatory risks, corporate espionage, AML, global warfare, anti-terrorist financing and corruption.

We can help you make informed decisions and mitigate potential risks for your business.
LEARN MORE