ETHICS AND COMPLIANCERISK MANAGEMENT

Improving business performance and fosteringa strong ethical culture through a sustainable process

Presented byMUHAMMAD YAHYA AHMAD

College of Education and Allied ProgramPCU, Manila

Risk Management Model

Enterprise risk management (ERM) is the process of aligning competitive strategy with the mechanisms that identify, aggregate, mitigate, avoid and transfer risk.

The goal is to reduce losses while seizing opportunities

ERM guides directors and executives as they coordinate the myriad tasks to identify the potential risks encountered by individual employees, business units, geographic divisions and corporate leadership.

DEFINE

PREVENT

DETECTRESPOND

EVALUATE

Five steps for building a sustainableethics and compliance process

Define ethics and compliance risk

Prevent ethics and compliance lapses/ failures

Detect noncompliance

Respond to allegations and violations

Evaluate results and continuously improve

Access risks Map risks to employee Policies, procedures Aligned with risks

DEFINE ETHICS AND COMPLIANCE RISK

DEFINE ETHICS AND COMPLIANCE RISK

Accounting breakdowns, including fraud, inaccurate recordkeeping, inappropriate record retention or destruction and noncompliance with the requirements

Business ethics failures, such as the exposure of confidential client information, conflicts of interest and giving and accepting inappropriate gifts

Employment related risks, like equal opportunity violations, workplace harassment and immigration offenses

Fair trading laws, which cover price fixing, abuse of dominance and collusion

Customer and workplace violations, for example, aiding and abetting illegal customer acts and creating unsafe workplace conditions

Product issues such as product safety failures and intellectual property violations, e.g., patent infringement

‘Tone at the top’ Education Communication Rewards

PREVENT ETHICS AND COMPLIANCE LAPSES/FAILURES

PREVENT ETHICS AND COMPLIANCE LAPSES/FAILURES

Set up the standards and procedures, and other aspects of the compliance and ethics program

Education: conducting effective training programs Promoted an organizational culture that

encourages ethical conduct and a commitment to compliance

Implementing feedback loops that maintain constant supervision over business units, job functions and individual employees that matching identifies as high-risk.

5 Keys to effective education

Engage corporate leadership to drive successful ethics education

Promote the benefits of interactive engagement drawn from new developments in e-learning

Combine the geographic breadth of ethics education with a focus on professional relevance

Move beyond the “carrot-and-stick” approach Create certification programs that attest to

effective education and compliance

Early-warning systems Controls for rapid detection Employee certification Self-reporting channels Compliance monitoring Compliance audits

DETECT NONCOMPLIANCE

DETECT NONCOMPLIANCE

Preliminary assessment Complete assessment and notification of

appropriate personnel Investigation strategy Document collection and interviews Written report and presentation of findings Report to employees

RESPOND TO ALLEGATIONS AND VIOLATIONS

Case identification, Investigation and closure Corrective actions Perform root cause analysis Communicate resolution

EVALUATE RESULTS AND CONTINUOUSLY IMPROVE

Metrics and benchmarks Policies, practices and procedures against

comprehension Ongoing risk assessment Reports and action Systems improvement