What is a Conflict of Interest?

Understanding and Managing Conflicts of Interest

A CONTEGRITY PRIMER

Conflicts of interest are a common feature of professional and personal life. They arise whenever we find ourselves pulled in different directions by competing commitments or concerns (interests). Understanding what conflicts of interest are, why they matter, and how to manage them is essential for maintaining trust, meeting our obligations, and making ethical decisions. This requires first understanding what a conflict of interest is and the landscape of interests that can pull us in different directions, and then examining how these interests can compromise the obligations we hold.

What is a conflict of interest?

At its core, a conflict of interest exists when competing interests interfere with your willingness or capacity to fulfill your role-related obligations. This definition highlights two crucial elements. First, you must have competing interests—two or more personal concerns or external commitments that could be in tension with each other. Second, these tensions must create a circumstance in which you are, or at risk of being, less willing or able to fulfil the duties and expectations attached to your professional roles.

Importantly, conflicts can arise when personal concerns (self-oriented interests) conflict with professional commitments (other-oriented interests), or when different professional commitments conflict with each other.

The Landscape of Interests

Interests come in many forms, and CONTEGRITY recognises two broad categories.

Self-oriented interests are concerns where you stand to benefit or lose something personally. These might be financial, such as gaining money or avoiding financial loss. They might be non-financial. Non-financial interests can be reputational, involving the protection or promotion of your standing in your field or community. They could be ideological, relating to beliefs you want to support or share. Personal wellbeing concerns—whether physical or psychological benefits or the avoidance of harm—also fall into this category, as do relational interests in building or maintaining personal connections.

Other-oriented interests are commitments or responsibilities to others where you don't necessarily gain or lose personally.

These interests can arise from a wide range of circumstances. Receiving funding or in-kind support creates interests, as do employment relationships, shareholding or ownership stakes, memberships in organisations or committees, and consulting arrangements whether paid or unpaid. Personal and professional relationships also generate interests, as do particular beliefs you hold, and health or other personal needs affecting you or those close to you.

Interests also vary in their characteristics. They can be direct (concerning you personally) or indirect (involving family, friends, or organizations where you have a stake). Some are formal and contractual, while others are informal. They may be explicit and clearly stated or implicit and unspoken. Finally, interests can be time-limited to a specific project or period, or ongoing and persistent across multiple contexts.

How obligations can be compromised

When conflicts of interest go unmanaged, they can compromise your ability to fulfill (other) role-related obligations in several ways:

• The allocation of time and resources may be affected, leading you to devote less attention than appropriate to a particular role or to prioritise one obligation over another inappropriately.
• The quality and integrity of your work may suffer as you conduct it less effectively or efficiently, compromise ethical standards of objectivity and fairness, or make biased decisions and judgments.
• Stewardship failures can also occur. You might misuse information by sharing confidential data or using insider knowledge inappropriately. Tangible resources like money, equipment, and facilities could be misappropriated, as could intangible resources such as data, organizational time, policies, procedures, and brands.
• Finally, loyalties may be compromised when you fail to promote the goals, values, and interests you're supposed to serve, fail to protect reputations appropriately, assist or favour competitors when you should not, or fail to act with appropriate reciprocity.

Why Conflicts of Interest Matter

The harms that can flow from poorly managed conflicts of interest extend across multiple dimensions. Strategic harms involve negative effects on your ability to conduct your work and achieve your occupational goals or obligations, including financial risks to you or your organisation. Relational harms affect interpersonal and group dynamics, potentially damaging the quality of working relationships, team cohesion, and collaborative partnerships. Reputational harms strike at the foundation of trust. Even if actual harm doesn't occur, the mere perception of conflict can damage credibility and undermine public confidence in you or your organisation.

Certain circumstances create red flags that make harms more likely or more severe. These include situations in which the activity requires breaking rules or contravening ethical norms, where you'd be engaging with individuals or organisations that have a history of ethical transgressions or lack clear governance processes, and where arrangements are long-standing or multi-faceted rather than simple and time-limited. Additional concerns arise when there are conditions that constrain your ability to make independent decisions or be transparent, when you hold a position of power or influence particularly over vulnerable people, and when there is potential for significant or irreversible impacts.

Managing Conflicts of Interest

CONTEGRITY guides users through a range of management strategies that can be employed individually or in combination, each with its own strengths and appropriate applications.

Disclosure involves making the conflict of interest known to relevant parties. It enhances your credibility and trustworthiness by demonstrating you have nothing to hide, and it enables others to judge for themselves what effect the conflict might have. Disclosure can also form the basis for productive discussion about how to manage the situation. However, disclosure is usually insufficient on its own and needs to be accompanied by more active management strategies.

Modification involves adjusting roles or activities to reduce the conflict or limit its impact. This might mean modifying what is done—avoiding certain topics, refraining from working with particular people, or not sharing specific types of information or resources. It could involve modifying who does what, such as recusing yourself from certain activities, involving other people who aren't conflicted or who have different conflicts to create "firewalls" or balance out effects. In some cases, it may even be possible to align previously competing interests so that fulfilling one actually promotes fulfillment of the other.

Monitoring involves opening processes to external scrutiny. This might include peer review, managerial oversight, transparency-enhancing procedures, or assessment against formal rules, principles, protocols, or standards. Like disclosure, being willing to open your processes to scrutiny can enhance your credibility and protect you from unfounded claims that conflicts have distorted your reasoning or behaviour. It also provides the benefit of independent feedback that can improve the quality of your work.

Harm management focuses on pre-empting or addressing harms when they arise. This might include taking out insurance policies or planning public relations strategies. While these approaches have their place, they should generally be used in addition to other strategies rather than as the sole approach, since they address consequences rather than preventing the underlying problems.

Finally, elimination involves simply not taking on the new activity or ending the existing circumstance that creates the conflict. This approach should be considered when risks clearly outweigh benefits, when the conflict cannot be managed effectively enough, or when the activity is unnecessary because the benefits could be achieved another way. The advantage of elimination is that it completely removes the risk of harm and shields you from criticism for inadequate management. The disadvantage is that any benefits associated with the activity are also lost.

CONTEGRITY also acknowledges that creative solutions may exist beyond these standard categories and allows users to develop customized approaches suited to their specific circumstances. The tool encourages innovation in thinking about how conflicts can be managed effectively.

For each management strategy you select, CONTEGRITY asks you to think through the details carefully. You need to specify precisely what will be done, how, when, and by whom. You should identify what resources, structures, and processes—such as training—will be put in place to support the strategy. You need to consider how the strategy itself will be monitored and revised as needed to ensure it remains fair, compliant, and effective. Finally, you should think about what potential harms the management strategy itself might create and what steps will be taken to protect people who might be adversely affected.

Perceived and Potential Conflicts

In addition to actual conflicts of interest, two other categories deserve attention. A perceived conflict of interest exists when someone external to the situation believes that a conflict exists even when it does not. Perceptions matter because they affect trust and reputation even if no actual conflict is present. Managing perceived conflicts often involves many of the same strategies used for actual conflicts: proactive disclosure, clear communication about management approaches, transparency about decision-making processes, and directly addressing misconceptions when they arise.

A potential conflict of interest exists when circumstances could change such that a conflict might arise in the future. This may occur in addition to existing actual conflicts or in situations where no conflict currently exists at all. Managing potential conflicts requires forward-looking risk assessment and typically involves two approaches: prevention (taking steps to keep the conflict from arising) and monitoring (establishing processes to detect when circumstances change and a conflict emerges). It may also involve developing management plans that can be implemented quickly if a potential conflict becomes actual.

Using the CONTEGRITY Tool

CONTEGRITY provides a structured way of thinking through these complex issues. The tool walks you through characterising the new activity you're considering, identifying whether conflicts of interest exist, weighing benefits against risks, developing a comprehensive management plan, and addressing both potential and perceived conflicts.