Which scenario is an example of a conflict of interest?

• A. An employee has an undisclosed personal relationship with a company that does business with their employer.
• B. An employee is related to someone who works for one of their company's vendors and informs their employer of the relationship.
• C. An employee for a phone installation company works as a fishing guide on weekends but does not tell the phone company about the other job.
• D. An employee discloses their relationship to the employer.

Answer: (A)

Conflict of interest is when a personal relationship or outside interest could influence, or appear to influence, professional decisions. An employee who has an undisclosed personal relationship with a company that does business with their employer creates a situation where procurement or vendor decisions could be swayed by personal ties rather than impartial judgment. Because the relationship isn’t disclosed, colleagues can’t identify or manage the risk, which is exactly what makes it a conflict of interest.

If the relationship is disclosed, the organization can put safeguards in place (like recusal from related decisions) to reduce or remove the conflict. The other scenarios either involve disclosure (which mitigates the risk) or involve outside work that isn’t tied to the employer’s vendor relationships, so they don’t present the same risk of biased decision-making.