Newsletter | Volume 1

Issue I
Issue II
Issue III
Issue IV
Issue V
Issue VI
Issue VII
Issue VIII
Issue IX
Issue X
Issue XI
Issue XII
Issue XIII
Issue XIV
Issue XV
Issue XVI
Issue XVII
Issue XIX
Issue XX
Issue XXI
Issue XXII
Issue XXIV
Issue XXV
Issue XXVI

click here to

Subscribe to our newsletter

To Unsubscribe click here

The Governance Dimension of Ethics and Integrity Issues

Focus on ethics and compliance helps reduce damages due to misconduct, legal fees, lawsuits, investigations and other expenses associated with misconduct, without taking into consideration the most expensive part which is the loss of reputation and brand value.

All companies must have an approach, contingency plan or methodology for restoring your global corporate reputation if an offense that is committed internally? Most of the Governance, Risk or Compliance (GRC) offenses often intentionally violate established policies, code-of-conduct, regulations or statutes. Common-sense definitions of what is acceptable, appropriate, wrong and ethical should be back to the drawing board.

The implementation and monitoring the cultural issues of Ethics and Integrity, helps to reduce company expenses, waste of resources and opens up opportunities for businesses. Companies that continually take into consideration the component of ethics, integrity and culture of the decision process, the choice if often made with the best interest of all stakeholders, losses are reduced, and a fair chance of business gains.

Third party due diligence cannot be outsourced
Companies that give ethics and integrity issues a priority are appealing to all stakeholders. However, the search for suppliers, distributors, partners or other members of the supply chain can be more cumbersome as it requires a through third party due diligence to ensure that the monitoring of ethics and integrity is not outsourced.

It is important not to compromise ethics and integrity for short or long-term business gains and opportunities when a questionable deal is also subject to a proper and ethical due diligence.

Too Big to Jail
The following examples from the financial services can be used as examples by all business institutions- by asking similar questions to address the breakdown ethics and integrity issues in risk governance.
  • Should banks push in-house products to investors or clients against superior third-party products to earn kickbacks from product vendors?
  • Is it ethical to sell securities to institutional customers who you know will collapse in value, and then use your proprietary trading platform to speculate about them?
  • Can you invade segregated client accounts and borrow the money for your operations?
  • Is it permissible to redefine a bank's central exposure hedging platform as a profit center and circumvent established risk controls to generate additional earnings?

Muddled thru unstructured risk management without expertise Unfortunately regulators, oversight, stakeholders, and investors were unaware that financial companies, were finding ways to circumvent or even marginalize their risk management to be able to 'sell' the above toxic financial instruments.

Therefore addressing the governance structure of risk management could significantly reduce if not eliminate the many GRC missteps, that force the oversight authorities to be extremely proactive. In the years leading up to the financial crisis, many firms muddled thru their risk management processes in an unstructured manner without ensuring the right expertise.

Serious thought and planning must go into finding correct ways to improve the protection and preservation of ethics and integrity for business and process quality, and logical decisions. Most of the above suggestions will be discussed at the Ethics and Integrity workshop in Mumbai on the 22nd March 2016.