The Five Main Risks A Company Must Manage when Dealing with Gambling Related Harms
11 March 2022
As gambling expands around the country, employers are constantly evaluating their ability to deal with growing demands around education, training, and resources for staff. Gambling in the workplace is expanding and policies should be implemented addressing the various areas of concern that may impact an employer.
The Society for HR Management notes that 25% of employers actually have formal policies to address gambling in the workplace. To that end, five main areas are often the focus of employers when dealing with gambling related harms in the workplace:
- People – Sheryl Sandberg, COO for Facebook at the time said, “The real competitive advantage in any business is one word only, which is ‘people.’” When someone struggles with a gambling problem, productivity and performance are often impacted. Additionally, the individual’s wellbeing may be jeopardized due to the impact on mental health, physical health, and the overall wellbeing of the employee.
- Business – “It’s not the manager’s job to prevent risks. It is the manager’s job to make it safe to take them” Ed Catmull, co-founder of Pixar Animation Studios. There are certain risks that are appropriate to a business and others that are not. When gambling and gambling harm occurs in the workplace, the business risk includes profit, bankruptcy, regulatory risk, and a potential decline in investor confidence.
- Legal – According to Lexis Nexis Risk Solution Report in January of 2022, “Fraud costs and volumes remain significantly higher than pre-pandemic for financial services and lending firms.” Covid-19 changed the landscape for years to come, both in terms of day trading accessibility and participation, as well as gambling related activities and crimes. This often comes in the form of embezzlement, reporting errors or inaccuracies, or employee theft to name a few. It is estimated that in 2021, $1 of fraud costs US Financial Services firms $4, compared to $3.64 in 2020, and $3.25 in 2019.
- Reputational – This is a risk that keeps the C-Suite executives and Board members up late at night. Reputational risk is driven by other business risks and will significantly impact the brand. This can lead to lost future business opportunities and negatively impact the existing client base. Vivek Karve, CFO for Marico once stated, “we don’t see reputation risk management as having a start and end date.”
- Information Technology - Stephane Nappo, Chief Information Technology Officer for Societe Generale International Banking once said, “it takes 20 years to build reputation and a few minutes of cyber-incident to ruin it.” A company that is dealing with an employee’s gambling often exposes itself to use of company property for illegal or legal gambling. With respect to illegal gambling, that can result in cybersecurity issues as well potential for hacking.
It is quite clear that as gambling continues to expand, employers need to stay current, up to date, and review policy and best practices to ensure they are safe from harm.
EPIC Risk Management works with companies and organizations around the globe to help avoid and minimize the destructive effects from problem and disordered gambling. Working with the Financial Services industry, we provide consultancy on audit and compliance, colleague conduct and HR to help mitigate gambling-related harm.
Commenting on this risk to organisations, Cifas’ Insider Threat Manager, Tracey Carpenter, said, “It’s really important that employers recognise the risk that gambling poses to their organisation from an insider threat perspective.
“Staff who develop a gambling addiction may find themselves under financial pressure to continue funding their addiction on top of their regular financial commitments. Internal fraud could be one method they try to use to fund their addiction.
“Fraudulent behaviour that may be considered includes everything from selling corporate equipment and claiming it had been lost, to stealing from a customer’s account and manipulating systems to cover their tracks.”
“Organisations must ensure they are actively developing an anti-fraud culture in their workplace, particularly as more employees work remotely. Recognising and addressing the harm that gambling addictions can cause is essential as part of this, and assistance should be provided to anyone who may be struggling with this problem.”
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