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

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Tone-at-the-Top revisited. Myth or Methodology

When Sarbanes-Oxley (SOX) implementation was at its height, our consultants were in and out of boardrooms and executive meetings and talked about The Tone-at-The-Top. When the tone went a bit musty we introduced the concept of Talk-the walk that was swapped by one-size-does-not-fit-all. No matter the superficial jargon the various paradigm changes, and compliance convergence the concept of Tone-at-the Top has survived and revitalized, probably due to the added responsibilities and liabilities of the board of directors and management.

Let the framework and roadmap of Copenhagen Compliance® achieve an increased the overall business performance by leading (tone-at-the-top), Good corporate governance on its own cannot make up for any toxic corporate culture or lack of culture or the right tone at the top. Consultants and auditors will continue to experiment with systems of checks and balances to ensure both good governance and controls including the issues of corporate culture values and traditions but continue to develop the checks and balances to create a new order based on transparency and accountability.

Global CSR and Bribery, Fraud & Corruption reality
Be it as it may, depending on the-tone-at-the-top companies can start by assessing the current CSR policies and processes and map these to the UNGPs. However with an added focus on UNGP as an internationally endorsed standard on CSR you end up being entangled in addressing a whole bunch of human rights issues all over the world and the risk angle to CSR is on the back burner.
  • 57% believe that the low level of awareness across the organization is equally true vertically: the importance of protecting information has not been a tone-at-the-top issue and therefore has not filtered down to lower levels of the business.

Transparency is never a bad thing for growth. It is normally affecting those that have something to hide, or to those who do not want to face the music when the going gets tough. When the papal tone-at-the-top is to believe in transparency and accountability, it certainly helps to increase the understanding and decreases the likelihood of corruption amongst the subsidiaries in parts of Asia, South America and Africa.
  • The Chairman of the board must face the music and determine the tone-at-the-top
  • What are entity level CSR risks and does the Risk committee have the necessary authority to inspect key CSR transactions
  • Increase public disclosure on benefit to high-paid executives, remuneration principles for all employees, deferred element in incentive schemes and related issues.
  • Management faces tougher CSR scrutiny under the authorisation process to monitor conformity

Having an active and effective framework and program that filters thru the organization, and the rank and file employees is even more important with the increasingly vigorous enforcement of regulations. Huge amount of resources is placed in the GRC enforcement efforts over the past several years after the financial crisis. In spite of that two-thirds of the top 20 largest criminal FCPA case resolutions have occurred in the last three and one-half years, and three of the top five largest penalties ever issued have been in the last year.

A clear indication of non-compliance with a price for violating global bribery and fraud mandates to be very high, involving not only significant fines and penalties, but also reputational damage, criminal prosecution and investor lawsuits.

Among other things, the framework addresses are the cautions against a "check the box" approach to GRC. The framework instead enhances and encourages directors and executives to set the right tone at the top and prove a commitment to a "culture of compliance" . The framework further provides solutions to reinforce and implement the soft values throughout the organization.

Tone at the Top and Corporate Culture
The framework delivers actions that promotes and actively cultivate a corporate culture. A monitoring and controls environment that understands and implements enterprise-wide risk management. Comprehensive risk management should not be viewed as a specialized corporate function, but instead should be treated as an integral component that affects how the company measures and rewards its success.

Running a company is an exercise in managing risk in exchange for potential returns, and there can be a danger in excessive risk aversion, just as there is a danger in excessive risk-taking. The right-tone-at-the-Top framework will provide several answers and solutions.

The Tone-at-the-Top narrative is currently available in Danish. Reserve you English copy when it is published next month.