How Conflict of Interest Solutions Protect Your Organization from Legal and Ethical Risks

Running a business in any industry will always inherently invite different categories and levels of risk, but in the same way getting poisoned looks a lot different than getting hit by a car, some forms of workplace risk are much more obvious than others. Conflicts of interest are among these more insidious forms of risk, often lurking unnoticed for a long period of time—right up until they start causing serious legal, ethical or financial problems. To counter this danger, many organizations implement conflict of interest solutions to catch instances of COI before they can start causing problems. 

What kind of safeguards do conflict of interest solutions provide, and what might happen to a business that chooses to continue operating without them? Let’s take a closer look at the risks courted by businesses that let possible COI risks run rampant, and the ways in which proactive safeguards can help prevent them. 

Without a Proper Conflict of Interest Solution, What’s in Store for Your Company?

It may not seem like the biggest deal that a business doesn’t have conflict of interest solutions in place. After all, a not-so-savvy business owner may say, COIs are just one potential category of risk in the wider workplace. And while that sure is easy to say, if you – or our hypothetical businessman – decide that conflict of interest solutions aren’t necessary for your organization, that could prove detrimental to your company in several possible ways.

Erosion of Trust and Integrity

At first, our COI-ignorant businessman from the previous example might muse, conflicts of interest can appear harmless. They might initially crop up in the form of a decision influenced by a personal relationship with a vendor, or doing a client a small favor off the books, or owning an undisclosed financial stake. 

When these conflicts of interest go undisclosed and unchecked, however, they start to create a workplace culture where ethical lapses are normalized. Employees and stakeholders cannot maintain confidence in an organization or its leadership when favoritism, bias, or a pattern of self-serving decisions are suspected. And an organization that cannot maintain its own integrity will eventually crumble from the inside out. 

Financial Losses

Conflicts of interest often create subtle financial inefficiencies that accumulate over time. Something as simple as selecting a vendor based on personal connections could lead to subpar contracts, inflated service costs, or missed opportunities for better deals with other vendors. These seemingly minor financial losses could easily compound over time into significant budgetary waste. 

Reputational Damage

Once a conflict of interest becomes public knowledge it can cause serious reputational damage to a company, and that damage can be difficult to reverse. Even if the COI in question was unintentional, it may still cause customers, investors, and employees to question an organization’s ethics and integrity. Reputational harm can lead to loss of business, difficulty attracting skilled workers, and increased regulatory scrutiny. 

Regulatory and Legal Exposure

Many industries, such as government positions and contracts, financial services, and healthcare, have strict regulations in place around conflicts of interest. If an organization doesn’t have proper conflict of interest solutions in place and COIs go unnoticed, that organization could inadvertently violate these regulations. By the time an audit, a whistleblower report, an external investigation, or some other circumstance reveals that conflict, the damage to the business has already been done. And that damage is often extensive, involving fines, legal battles, and reputational harm.  

Unconscious Bias

Even when a conflict of interest isn’t intentional, it’s still present, and able to subtly distort judgement. A leader who unconsciously favors a family member under his professional jurisdiction for promotions may overlook more qualified candidates. When personal gain informs strategic decisions instead of actual, objective data, a business’s ability to compete long-term suffers. 

What Conflict of Interest Solutions Can Do

Now you have a better idea of what could happen when people like our friend, the hypothetical businessman, don’t utilize systems designed to identify and mitigate the harm posed by conflicts of interest. Next, let’s take a closer look at the ways in which conflict of interest solutions can benefit your organization’s operations. 

Disclosure Management

Systems for managing conflict of interest can digitize and streamline COI disclosure by automating reminders for employee disclosures. Automated COI systems also allow for real-time reporting once employee disclosures and responses start rolling in. This quick turnaround on data collection and availability enables compliance teams to analyze responses, spotting patterns and isolating potential issues for further examination, almost immediately after submission.

COI Audits and Policy Enforcement

Conflict of interest audits are an important part of the disclosure process, helping to ensure that a business and its connections remain legally, ethically, and regulatorily compliant. Without the right tools, audit processes can be time-consuming, and could possibly miss potential conflicts, opening the organization up to trouble in the event of a regulatory or compliance audit.

Conflict of interest solutions help standardize and streamline this process, allowing businesses to implement and manage periodic internal audits, using digital technology to streamline processes and remove the possibility of human bias from the process. Safeguarding secure, thorough COI audits help ensure consistent, rigorous enforcement of conflict of interest policies. 

Employee Training and Culture Building

An important element of analyzing and preventing COIs that conflict of interest solutions shouldn’t disregard is employee training and comprehension. Ultimately, the best COI procedures won’t mean anything if a company’s workforce doesn’t understand and comply with guidelines around these kinds of conflicts. 

COI software systems recognize this, educating employees on the dangers posed by conflicts of interest as well as what exactly constitutes a COI, so workers know why, how and when they should disclose. Conflict of interest solutions that encourage education and accountability on every level from every team member in this way help establish a strong ethical thoroughline around risk in the workplace, encouraging transparency through ethical leadership. 

ComplianceBridge Helps Safeguard Your Future

With something as vital as the potential success of your company, you can’t simply advance by hoping that everything works out for the best and everybody always behaves accordingly. Avoiding the pitfalls posed by COI requires proactive conflict of interest solutions.

No one understands this better than ComplianceBridge! Our intuitive software for conflict of interest management makes the COI disclosure process simple and seamless for everyone involved. ComplianceBridge’s software allows users to create COI forms with customizable question sets, targeted distribution, and real-time response reporting. We also make it easy to automatically flag certain responses, set reminders and notifications, and schedule future periods for disclosure or training, all while saving leadership and employees time and effort.

If you’re ready to learn more about how ComplianceBridge is the perfect solution for managing workplace COI, contact us to request a demo today!