A conflict of interest can occur in business or in public life. This happens when a person has a divergence between what she might gain on a personal, perhaps financial level, and her professional responsibilities. If this potential for conflict is disclosed and dealt with correctly, no serious repercussions will follow. However, if it is not properly addressed, a conflict of interest has the potential to damage the people involved and also the whole organization. A recognition of the potential for conflict of interest is crucial. All too often these issues erupt when something goes wrong -- when the outside world becomes aware of the conflict of interest and the worst is assumed.
Develop a clear policy on disclosure, so that all employees or board members know what outside interests must be divulged. Sometimes these issues are suppressed not because of ill-intent but because the person either did not recognize the conflict or did not fully disclose it in good time.
Disseminate this policy and information to all relevant parties. If appropriate (perhaps in the case of a public body), also make this information available to the world at large. This encourages openness and minimizes the chances of later misunderstandings.
Keep the policy proportionate. For instance, it may be that a person who has a conflicting interest should just withdraw from particular meetings or decision-making processes. There may be no problem with the person dealing with other issues within the organization.
Develop a clear policy to deal with situations where a person does not disclose conflicting interests. This can be a serious issue, and a disciplinary procedure may need to be instigated. It may be necessary to act swiftly and decisively in this situation, as allegations of corruption can be extremely damaging and can tarnish the reputations of others who may not even have been involved.