Clearing the Fog
How to Keep Conflicts of Interest From Clouding Your Judgment
Not all conflicts of interest are bad. Rather, it’s the way they are disclosed, identified and managed that determine how much harm they can inflict.
No one’s interested in conflict, especially when it comes to their own business. A conflict of interest (COI) arises when an individual or organisation has competing interests or loyalties that may influence their ability to make impartial decisions. While not inherently negative, COIs can compromise objectivity and integrity and cloud rational judgment in decision-making processes. That’s why recognising and managing them is crucial for maintaining trust and credibility. At Noble Shore, we are experts in helping organisations do this to avoid any potential legal, financial or reputational repercussions that can affect business.
Recognising Conflicts of Interest
Everyone is likely to experience pecuniary (financial gain or loss) or non-pecuniary (non-financial in nature) COIs at some point in their lives. They can occur in both private enterprise as well as the public sector. To recognise COIs, individuals, leaders and executives alike need to identify situations and actions where personal interests of their own or their employees may interfere with their duty to act in the best interest of the company, organisation or business they serve. There are a few types of COIs our experts advise to be aware of:
- Personal interests can have benefits or disadvantages. When they interact with professional or organisational interests, they can turn into conflicts of interest.
- Actual COIs occur when an individual’s personal interests interfere with their ability to act independently and impartially for the organisation they represent.
- Potential COIs may arise when an individual’s personal interests could conflict or unduly influence their responsibilities.
- Perceived COIs are when an individual’s personal interests or affiliations, to a third-party observer, creates the appearance of bias in relation to their professional duties.
Managing Conflicts of Interest
Managing COIs can be challenging, but it is possible – and equally important – to prevent and minimise ethical or legal issues that may arise. NSW ICAC is the leading agency on managing COIs and provides a thorough and comprehensive guide on recognising and managing risks. At Noble Shore, we offer tailored advice and solutions that enable best practice to help several businesses and organisations navigate the complexities of managing conflicts while safeguarding their integrity. Here are some tips for managing COIs:
- Disclose any impartial or biased interests, including financial investments;
- Objectively assess the risk of COI/s using the assistance of an outside and informed observer, commonly referred to as the ‘reasonable person’;
- Develop a plan to manage COI/s, which could include implementing restrictions or divestiture of assets;
- Monitor COI/s regularly by conducting periodic audits and independent review mechanisms; and
- Adopt clear policies and standards and provide training for employees to cultivate a transparent and honest organisational culture.
Key Takeaways: What next?
All in all, COIs pose a fundamental challenge to every tier of an organisation. If they’re not managed, they can undermine confidence in business decisions and lead to poor outcomes.
Noble Shore provides professional advice alongside customised solutions and strategies to help you address COIs and achieve your desired business goals, resulting in better overall performance. Contact us today on 1300 822 694 or at contactus@nobleshore.com.au
