Private enterprise in Russia has a very short history.

Not enough time has passed since 1991, when private ownership and commercial enterprises were introduced, for a business culture to take root, both in business and in the market economy as a whole. The peculiarities of doing business in Russia are that:

• The vast majority of the population is unaware of the concept of "private property".
• High levels of corruption at all levels
• Large companies are often subject to raiding parties and hostile takeovers.
• a punitive rather than supportive attitude of the state towards business
• Low level of financial literacy
• High social stratification
• Society (in its common sense) does not condemn or frown upon stealing from the state or a company.
• Russian entrepreneurs do not know how to build long-term businesses.

Doing business is directly related to taking entrepreneurial risks, but when a company reaches a certain level, ignoring risk management is a threat to the existence of the company.

The main reason for triggering risks (financial, intangible and other losses of the organisation) is the lack of a system of control and risk management (business security).

According to a survey conducted by PricewaterhouseCoopers (PwC), "Countering Fraud: What Measures Are Companies Taking?" (https://www.rbc.ru/economics/16/05/2018/5af9c1aa9a7947ca948205bd) Russia is one of the top 5 countries where companies are most affected by economic crime. In this ranking, Russia is tied with the Republic of Uganda (Africa).

Crimes in this study refer to actions that are classified as such by the companies themselves, not by law enforcement agencies, and are not necessarily formalised as criminal cases. Misappropriation of assets and corruption are the most common complaints made by companies in Russia

It is worth noting that the number of companies that have experienced fraud is increasing year on year. Approximately 70% of companies report the facts of fraud they have encountered.

The most common type of economic crime is asset misappropriation (reported by 53% of companies). Bribery and corruption is in second place (reported by 41% of companies). The third most common type of fraud is related to the procurement of goods and services (35% of companies).

The main business losses from economic crime are financial losses and loss of assets. In Russia, 22% of respondents from companies that had experienced economic crime said that their losses from such crimes exceeded $1 million.

In Russia, almost half of respondents said that fraudsters were dominated by employees of their own company (48%). The number of respondents who cited external fraudsters as the main threat was 39%.
Fraud is most commonly committed by middle managers (47%). The proportion of fraudsters among top managers has risen to 39%. Such fraud is difficult to detect, destroys corporate culture and sets a negative "tone from above", say the authors of the survey. Junior managers commit 14% of the crimes.

This information is also confirmed by a study of the Association of Certified Fraud Examiners. According to their data for the last 2 years, almost half of Russian companies have been confronted with economic crimes involving their own employees.

Fraud costs companies at least 5% of their annual turnover. In some cases this figure is even more catastrophic, up to 35-40% if the company is small.

These statistics make it clear that once a company reaches a certain size, it needs to devote as much attention to risk planning and fraud prevention as it does to its core business. After all, in addition to financial losses, fraud can also lead to intangible and reputational losses.

LEAKS OF CONFIDENTIAL INFORMATION

Company employees who have access to all the information can use it for their own purposes (selling customer databases for later use by other organisations, transferring personal information about partners, insider information about supplies and production, data about the company's financial performance for raiders and competitors).

BRIBES (KICKBACKS)

According to the experts at HeadHunter.ru, more than a third of sales and procurement employees are ready to take a bribe if offered. Kickbacks reduce the commercial profit of organisations by 11-15%. The essence of this method is simple: an employee receives a percentage "for services" rendered to a certain company, for which he receives special preferential terms of cooperation (provision of discounts, payment in instalments, priority delivery of products, etc.).

FALSIFICATION OF DOCUMENTS

Most commonly, reports and other documents used to award bonuses or reimburse expenses are falsified. This is most common in companies where pay or bonuses depend on efficiency indicators, as well as in companies with travelling jobs, frequent business trips, etc.

ENTREPRENEURSHIP AT WORK

Very often, employees start their own business without taking a break from their responsibilities. They choose the same field in which they work and act as a competitor to their employer. The methods used are: stealing the customer base, gathering inside information, outsourcing to a front organisation, using their personal company to bid for contracts, etc.

THEFT

It is the misappropriation of money entrusted to an employee, the appropriation of part of a product or the theft of funds. Depending on the circumstances, fraudsters may keep products, money, equipment or use company property or vehicles for their own purposes.

FACTORY FRAUD

Production fraud is often based on exaggerated material consumption rates. An employee will write off more raw materials than he or she actually uses in the production process and use the difference as he or she sees fit. Fraudsters may also substitute cheaper materials for some of the materials they claim to use.

ILLEGAL WITHDRAWAL OF FUNDS

The use of intermediaries - companies controlled by current or former employees of the employing company - is the most common scheme after kickbacks. It usually works like this: an intermediary appears between the supplier of the service/goods and the actual buyer, and it is the fraudulent employee who has signed an overpriced contract with the related company. The difference between the contract price and the market value is shared among the accomplices.

SHIPPING TO SHELL COMPANIES

This system is used when a salesperson uses "his" company as an intermediary for the end buyer. In this way, part of the profit goes into the employee's pocket. There may also be schemes where debts to such companies are simply written off when the statute of limitations expires. Or, if bonuses for sales managers are tied to sales volume rather than the receipt of funds from customers, a scheme may be used to ship to non-existent companies.

CYBERSECURITY

Nowadays, IT security is one of the most important components of a company's safe operation. Hacking attacks, theft of confidential information, unauthorised access to banking services, blocking of servers and disruption of company operations, etc. are the main risks against which it is necessary to have a protection system.

RAIDER ATTEMPTS

Attempts to take over companies illegally, to change the shareholders and the CEO, or hostile takeovers are not uncommon. To this end, a number of measures are taken by an organised group. To this end, constituent documents are falsified, attempts are made to make changes in the Unified State Register of Legal Entities, court decisions are falsified, PR actions are carried out, etc. It is necessary to create procedures in the company to prevent such situations.

INDUSTRIAL ESPIONAGE (WORKING FOR COMPETITORS)

This is a form of unfair competition in which the illegal acquisition and use of information constituting commercial, official or company secrets is used to gain an advantage in business activities and to obtain material benefits. This is often done by introducing "their" people into the company's staff, or by recruiting or bribing existing employees.

LEGAL RISKS

Government agencies are now pursuing a rather harsh policy towards business. It is very important to have a system to monitor changes in regional and federal legislation, the impact of these changes on the business activities of companies, and to respond to possible requests, requirements, notifications from regulatory authorities, etc.

ACCOUNTS RECEIVABLE

Receivables management requires a comprehensive approach, starting with preventive measures (checking counterparties, assessing their reliability), followed by regular monitoring of the financial situation of counterparties and, in the final stage, mechanisms for effective collection of overdue receivables. In this way, it is possible to minimise potential losses arising from the risk of nonpayment and reduced profits.

EMPLOYMENT RELATIONSHIP

One of the most unpleasant situations for a company is when disgruntled employees begin to use their position to blackmail, file complaints with the courts and labour commissions, and deliberately smear the company in the information field. This usually happens when labour relations are not properly formalised, non-disclosure agreements are not signed, there is no system for monitoring employees' activities and conducting internal audits, and the company is overly loyal to its employees.

MEDIA MONITORING

It is necessary to constantly monitor the information space, the media, reviews and comments on the Internet for the presence of negative and false information to minimize the reputational risks of the company.

SANCTIONS RISKS

This is a new trend that needs to be taken into account in the current political environment. It is important to assess both the risks of one's own business activities and the risks of working with external partners in Russia, the CIS, the Baltic States, etc.

Our main task is to free the CEO's resources from the need to solve various problems and contingencies, to fully ensure the performance of risk management and corporate security tasks, allowing the CEO to focus on his main function - the development and expansion of the business.

For effective and safe operation of the company, in addition to employee motivation, KPI system, incentive programmes, marketing activities and sales development plans within the company should be a system of internal and external threats to the company, protecting the assets and interests of shareholders.

We perform all the functions necessary for the safe operation of the business:

• Full legal support for the company's activities
• GR, establishing relations with state authorities
• Representation of interests in state structures
• Verification of the trustworthiness of legal entities and individuals
• Identifying the affiliation of employees and partners
• Debtor management
• Risk analysis for entering new markets
• Comprehensive monitoring of external threats
• Managing reputational risk
• Investigate fraud by counterparties, employees and others
• Detect internal corruption and ethics violations, insider trading and unauthorised use of confidential information
• Preventing the misappropriation of funds and assets
• Ensuring the personal safety of company owners and senior executives
• Corporate conflict resolution

The main goal is to create the necessary system to prevent business risks and protect the company from external and internal threats.

It is also very important to create the necessary system of activities and rules for employees within the company as soon as possible, because then change will be more difficult and more expensive.

Directions:

1. Establish procedures for the pre-screening of new counterparties and potential employees.

2. Regular monitoring of external threats to the business

3. Regularly monitor key employees for fraud and affiliations

4. Regularly monitor key counterparties to identify risks to reliability and deterioration of financial condition

5. Conducting an internal audit of the previous period to identify problematic cases and continuing to implement measures to eliminate them.

6. Analysing the current situation and creating a regulatory framework for both company employees and external partners.

7. Implementation of a system to control internal processes and activities of company employees

8. Implementation of an IT security system

• On the market since 2007.
• Experience of working with large foreign and Russian companies.
• We provide services in Russia and CIS countries.

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