Well known fraud investigator Jonathan Marks, defined a root cause analysis as “a research based approach to identifying the bottom line reason of a problem or an issue; with the root cause, not the proximate cause the root cause representing the source of the problem.” He contrasted this definition with that of a risk assessment which he said “is something performed on a proactive basis based on various facts. A root cause analysis analyzes a problem that (hopefully) was previously identified through a risk assessment.” He went on to note a, “Root cause analysis is a tool to help identify not only what and how an event occurred, but also why it happened. When we are able to determine why an event or failure occurred, we can then recommend workable corrective measures that deter future events of the type observed.”

Marks also contrasted a root cause analysis with an investigation. He noted, “in an investigation we are try to either prove or disprove an allegation.” This means that in a compliance investigation you may be trying to prove or disprove that certain transactions could form the basis of a corrupt payment or bribe by garnering evidence to either support or refute specific allegations. You do not assess blame and that is the point where a root cause should follow to determine how the compliance failure occurred or was allowed to occur

Three key takeaways:

  1. A root cause analysis is now required if you have a reportable compliance failure.
  2. There is no one process for performing a root cause analysis. You should select the one which works for you and follow it.
  3. To properly perform a root cause analysis, you need trained professionals who really understand what they’re doing.