… rendered ineffective by socio-psychologically savvy fraudsters – are at the core of my forthcoming talk at the ACFE Conference in Frankfurt a.M. The invitation to hold a session has prompted me to focus on Germany’s “hidden champions”, its famed Mittelstand.
Those over 3 millionSmall and Medium Enterprises (short SMEs) have come under increasing and severe pressure from foreign direct investment (FDI), mainly from China but also in the form of European and North-American mergers and acquisitions (M&As).
Frequently marked by hierarchical and even patriarchal structures, sceptical of progressive whistleblowing and informant practices and approaches thanks to its history, Germany’s SMEs have suffered substantial losses and remain fairly resistant to lessons-learned, resulting from fraud committed by social engineers (Business Email Compromise or BEC, also CEO-Fraud or Chef–Trick) that continues to balloon.
Fraud, frequently conceptually misunderstood as an exclusively external phenomenon urgently requires more attention and a better grasp in terms of scope and depth (i.e. covering holistically the aspects of Wirtschaftskriminalität, Betrug and Missbrauch of resources, data etc.). It finds fertile ground in an organizational culture of fear in particular where:
speaking up and speaking out are equated with insubordination,
creativity is the privilige of certain departments, functions, individuals or hierarchy levels (or even demographics) and
social compliance dominates every action in the organizational routine.
These unhealthy parameters provide the perfect conditions for fraudsters who understand to read the obscure and subtle signs (or absence of such) of victim organizations.
Mitigating this fraud risk (and related reputation risk) and effectively tackling this wide-spread and potentially existency-threatening dilemma is not what most SMEs believe it to be: the current dominant knee-jerk response of staff firing and shame-driven hiding of failed (or barely existent) risk cultures is only adding power to fraudsters – thereby benefitting foreign investors and competitors.
Instead, smart empowering and effective risk strategies can leverage existing functions but require radical rethinking and a thorough understanding of the socio-psychological factors that cannot be engineered on paper into Germany’s SMEs.
Overcoming fear and building trust across functions are central to this type of progressive and sustainable immunization. Transparency and non-authoritarian leadership styles are key pillars in building this type of risk resiliency.
Conference attendees will have full access to my paper including appendix and references and the slides.
The personal, the societal, the international When thousands of Icelanders, expats, tourists and exchange students gathered in a memorial walking, the temperatures well below freezing, the mood was calm, quiet and collected. Participants united in a walk towards the point where Birna Brjánsdóttir had last been seen – by public cameras – to place flowers and candles at this spot, and at Arnarhóll, Reykjavik’s historically, culturally and geographically central hill.
Role of community: Gemeinschaft, cohesion and cultural norms
Community and collective effort in this extremely rare case of violent crime (Iceland’s remarkably low crime rate, OSAC report 2015) have been enormous. The search-and-rescue operation for missing Birna, had been similar to those in the more frequent events of lost hikers, which entail considerable and concerted collective efforts. Here in Iceland, the planet’s most peaceful nation‘s police officers carry no firearms, the military budget constitutes 0.1% of the GDP and the country has no national military force or army. That makes the significant and effective role of civic engagement and community become even more obvious. While Icelanders may deem this the national norm, anyone who grew up elsewhere or lived in a society that is marked by more fragmentation, separation, anonymity and lack of cohesion will have been touched by the quiet power of what German sociologist Ferdinand Tönnies coined Gemeinschaft. Outsourcing of certain tasks and relying predominantly on or even exclusively on professional specialists is not an option. This may be rooted in the geographical location and historically resulting from a strong sense of interdependence in a harsh climate and ever-present risks thanks to volcanic activity and other natural forces.
Violent and white-collar crime in transnational communities
The investigation of the violent crime has brought the aspect of community involvement to international audiences, the attention not least resulting from sustained all-time high interest by tourists. As mentioned in my previous article on tourism risk in Iceland and its characteristic two-way nature, the tragic loss of a young Icelandic woman raises awareness of usually much less visible links.
Iceland’s culture, informal norms, and practices show how civil society and community engagement encourage thought-provoking participation also in temporary visitors and those abroad, those who are maintaining an interest from the distance by the help of conventional and social media.
We also see how crime transgresses national borders. It transfers from one nation, one island to another – in this case via the Greenlandic seafood trawler Polar Nanoq which had a substantial amount of drugs on board. We may notice also how little known and understood Greenland’s societal issues are beyond the confines of the Nordic nations, and Nordic co-operation, such as the Arctic Council’s activities (2016 Assembly, panel on mental health issues). Greenland, not a member of the EU or Schengen Area, as the Faroe Islands, is subject to Danish authority, which includes border control issues, and immigration into Greenland.
The painful violent loss of a young woman’s life helps us further understand the vital role of community and civil society in resolving and preventing crime. In this sense, the police investigations, so far, have highlighted some interconnected aspects, such as:
the links between violent crime and white-collar crime:
transnational drug trafficking tends to involve money laundering (of proceeds) as well as subsequent tax evasion, bribery (of various officials in the process of transnational drug smuggling) and document fraud.
Civil society engagement in both nations, Iceland and Greenland, at this time of shock and grief, have shown that the response and engagement of the wider society are absolutely vital in awareness-raising. The resulting and ongoing discussion of meaningful ways, responses and mechanisms are central to effective prevention of future crimes, whether in Iceland or Greenland.
At the time of writing the case is still under investigation and a final report of the findings has not yet been published.
Tourism a hundred years ago or so used to be totally different from what it is nowadays. My maternal grandparents then also were no strangers to relocation and re-rooting. They enjoyed travel thoroughly and up into their old age. But their trips used to be longer – actually quite long, spanning often three, four or more weeks at a time. They immersed themselves and stayed in one place. Their idea of holidaying was remotely resembling an anthropologist’s or ethnographer’s project, when the researcher “is going native” – which is a balancing act as they may lose objectivity. Suffice to say, my grandparents had a rather strong influence on what I would become…
As a result of very low airfares, seasonal collective escapism and the pressures of impression management, we see nowadays something that could be called fast food-style tourism. Extended weekend trips, or even just a fifty hours visit, especially now at the year-end period, are becoming ever more common.
The Icelandic króna’s strength certainly contributes to this phenomenon. Our weather here frequently welcomes travelers with wind speeds of 40-60 km/h which add to the issue. Travelers tend to want to remain sheltered but enjoy the scenic views. Hiring the obligatory 4×4 and going on a selfie spree on moss in Icelandic lava fields seems a – sort of – natural choice.
Tourists may not find the time to consult their travel guide and read up on the less exciting section with rules and warnings if they actually purchased one in the first place. This is probably a by-product of being on some kind of budget and taking a short trip. In addition, many may assume that a nation as widely fluent in English as Iceland, is rather very similar in their values and customs. And this is where things potentially go wrong.
The legislation concerning off-road driving in Iceland is simple and warnings are issued in English, with hefty fines. The number of cases has been increasing, though, and keeps making headlines. Tourists have been found guilty of disrespecting and damaging the fragile nature by ignoring closed roads, by crossing rivers, and driving generally where they are not supposed to. Extremely quickly changing weather conditions and tourists simply underestimating nature’s power have probably been playing a part in those incidents too.
Communication becomes the key to understanding what appears so hard to grasp – all the taken for granted, the common sense that appears to be missing in foreign tourists who litter, trample down what’s precious to nature and locals and ignore the rules that come naturally to the locals. As often though, whether it is just a few “rotten apples” that give tourists a bad reputation in general or if it is a wider issue, perhaps even systemic, is not so easy to say. What seems to look like ignorance, arrogance, or inhibition thanks to being abroad and possibly intoxicated whether by alcohol, the scenery or else, is perhaps the root cause of this behavior. Again, this may be too simplified – but it is a common notion that shapes the discourse
Communication of values, expectations and boundaries is what is at the core of this issue. It could be argued that some of those may be reasonably assumed as shared across Northern European or even among Western industrialized nations. But it may be a rather a misleading assumption that would overly rely on simplifications.
From within a most popular yet also very vulnerable tourist destination, I found the way Iceland has been handling the matter very persistent and it remains a curious aspect that may lead to wider subtle changes also among those visiting. Iceland’s explicit encouragement to blow the whistle on misconduct is refreshing. A nation that comprises of only 337,000 residents, yet expects 2.5 million tourists in 2017 simply needs to source its own crowd, more than any other nation, it seems. It wouldn’t be the first time, as you may have heard, rewriting the nation’s constitution by sourcing the crowd (Stjórnlagaráð 2011 ) was an attempt Icelanders were willing to make.
Locals, and foreign permanent residents alike, are fond and respectful of the fragile nature and while the weather can be brutal, beating you hard with rain, hail, sleet and strong wind, persistent darkness or daylight – anyone who has been outside the urban borders, in the more remote mountainous areas knows that litter (including human waste) and footprints live on for a long time.
Communicating repeatedly – in English – that reporting misconduct to the police by noting the number plate and taking photos, is wanted and deemed useful. Identifying and reporting environmental violations is citizens’ civic duty. Underpinned by media reports of fined drivers, the media coverage highlights, in detail, where drivers have transgressed the rules and how they caused damage to the nature – which could be deemed a way to educate the global public on this specific topic.
In this matter, as often, Iceland shows a pragmatic stance with an absence of passive-aggressive behavior. Instead, the assertive approach sets clear boundaries and signals healthy collective self-esteem. Quietly confident, Icelanders know what they want to achieve. Absent from this picture are also the shaming and blaming, the lamenting and generalizing that can be found in some other countries – and tend to be counter-productive as they trigger predominantly resentment which is ineffective in the pursuit of actual behavioral change.
Culture certainly plays a huge role in handling and discouraging unwanted behavior and any attempts to discourage it or change the collective wrongdoing that groups of tourists may temporarily import. However, swift and consistently acting upon it, including reporting of fines imposed and meaningful actions taken by the police, such as community service imposed, are underlining the credibility and the sincerity of the approach. They leave no doubt that the population is vigilant and protective of its valuable nature, thereby increasing the effective deterrent of penalty to be expected by tourists.
Tourists may come from very diverse socio-economic backgrounds and nations, legislation as to environmental crime may differ widely. Their communities may place very different, perhaps much lower value on the nature, the natural environment, but also, perhaps on individual human beings as such. Some tourists may hold lower self-esteem, whether individually or collectively, they may indeed also hold lower self-respect and lack the sense of respect for nature that is so deeply ingrained in the Icelandic culture. This may not be changed overnight, nor by words alone. But these persistent actions speak louder and they may be one of the few long-lasting souvenirs that tourists take home, even if being fined for destructive driving is financially painful – and community service no glamorous fun – it may just stick.
The remarkable aspect is that this is no perfunctory act, not out of compliance with some imposed rule or piece of legislation by some regulatory or supra-national body that has been grudgingly implemented. Rather, it is out of authentic deep-seated understanding and appreciation of the way Icelandic nature works and human-nature interaction is lived and perceived, how many decades are required in order to grow and restore what has been destroyed in a mindless moment, the blink of an eye.
Objectively considered, it may strike many fastfood-style tourists as an odd thing -realizing that what they have come to see took that long and is that valuable. If their home is in a city that is scarce of nature and features human-built gardens and parks and very limited communal space, but an over-abundance of traffic and air pollution, too much artificial light and too little respect for genuine human needs, then it might be understandable, yet not excusable, that such behavior occurs.
The way this particular tourist misconduct is being dealt with is:
without blaming and shaming, but
swiftly and consistently and
appropriately for the purpose of restoration and as collective self-protective measure.
It is an attitude that I hope so see being exported and adapted in other nations. Reporting misconduct, fraud, corruption and other violations tend to remain negatively connoted, often deemed an act of betrayal rather than of deep loyalty and sense of duty. Instead of focusing on improvement and whistle-blowing as natural civic duty, reporting misconduct remains in many jurisdictions burdened with layers of bureaucracy, lack of efficient and effective judicial commitment as well as slow and ineffective law enforcement.
Who says that lessons learned from managing tourism risk and blowing the whistle on environmental violations can not be transferred to other areas and industries?