What is conflict of interest?

Created by Kelly Knudsen, Modified on Fri, 19 Jan at 9:40 PM by Kelly Knudsen

A conflict of interest refers to a situation where an individual or entity has competing or conflicting interests that could compromise their ability to act impartially or make decisions solely in the best interests of another party. It occurs when personal, financial, professional, or other interests have the potential to influence, consciously or unconsciously, the judgment or actions of an individual or organization.

Conflicts of interest can arise in various contexts, including business, governance, public service, and professional relationships. They can occur between individuals, between individuals and organizations, or between different organizations.

Conflicts of interest are generally considered problematic because they can undermine fairness, impartiality, and trust. They can lead to biased decision-making, compromise the integrity of processes, or create the perception that decisions or actions are influenced by self-interest rather than the best interests of others.

To manage conflicts of interest effectively, it is crucial to identify and disclose them openly. This allows for transparency, evaluation, and the implementation of appropriate measures to mitigate the potential impact of the conflicts. Such measures can include recusal from decision-making, implementing safeguards, seeking independent advice, or establishing ethical guidelines and codes of conduct.

By addressing conflicts of interest proactively and transparently, individuals and organizations can uphold ethical standards, maintain trust, and ensure that decisions are made in a fair and unbiased manner.

For support in managing your fiduciary responsibilities, visit Fiduciary In A Box.