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. http://www.copenhagencompliance.com/mailer/mumbai2016/mailer.htm
