As the world becomes more globalized, businesses must remain aware of what ethical risk and compliance issues apply to their operations in different countries. They also must establish clear policies and procedures to prevent and address ethical risks.
Says KPMG, the majority of Chief Compliance Officers (CCOs) expect the emphasis on compliance will grow due to the expanding demands and scrutiny of regulations, with the most significant push to improve compliance anticipated to originate from boards and regulatory bodies.
As the saying goes, you don’t know what you don’t know. When companies address risk head-on, it can help reduce legal liability risks, improve employee morale and productivity, enhance reputation and brand image, attract and retain top talent, and reduce the risk of employee misconduct.
It is critical to promote a culture of compliance across an organization, provide employees with the tools and resources they need to make ethical decisions, resolve ethical dilemmas, build trust between employees and management, and create a more positive and productive work environment.
Businesses are taking risks seriously and remain deeply committed to creating a more ethical and compliant workplace. On that note, as Summer transitions into Fall, we present SAI360’s top risk areas in no particular order) most in-demand with our clients so far in 2023.
1. Corporate Culture
The foundation of any successful business lies in creating a culture based on trust, respect, and integrity.
Businesses must be aware of potential risks in their organization and its supply chains, such as modern slavery, diversity, harassment, discrimination, and human rights issues, and take steps to prevent them.
A clear and concise—and values-based—code of conduct can help prevent ethical lapses and create a more ethical workplace. Ask yourself if there are mechanisms in place for employees and stakeholders to speak up and report any potential violations. Beyond paperwork, it is essential to go the extra mile. Is your organization conducting in-person audits to visit suppliers and engage with their workforce? This hands-on approach can reveal insights that may otherwise remain hidden.
Equally important is ensuring your workforce is well-informed and trained to identify potential risk areas. It is a multi-faceted challenge, but addressing these questions is a vital step towards ethical and responsible business practices.
Definitions of “corporate culture” must be expanded on to foster organizational success. In light of the evolving landscape of workplace culture, it is essential to reassess priorities. While perks like free snacks and game rooms may have once defined company culture, today’s remote and hybrid work environments demand a broader perspective.
The absence of daily in-person interactions necessitates a shift in our definition of a thriving workplace culture. Instead of fixating on superficial benefits, place greater emphasis on how the organization aligns with its objectives and supports employees in achieving them. This means fostering a sense of purpose, providing the necessary tools and resources for success, and nurturing a work environment where collaboration and well-being are paramount.
As organizations adapt to new ways of working, redefining what truly matters in shaping a positive and productive organizational culture remains critical.
2. Anti-Bribery & Anti-Corruption
Not only is bribery and corruption illegal and unethical, but it can also cause serious damage to a business’s reputation and bottom line. It’s important to have clear policies and procedures in place to prevent these practices.
Bribery and corruption must be acknowledged and addressed. Establishing a culture that has a profound impact on employees’ actions, decision-making, and behavior is a formidable undertaking that often demands an abundance of sensitivity, patience, and resources.
It is important to recognize that the majority of individuals aim to be effective employees and make sound choices. However, there are instances where conflicting demands can lead to poor decisions by employees. Emphasizing behavior-based solutions will help tackle these kinds of challenging situations.
In some cases, corruption can become so deeply embedded within a company’s culture, that it becomes perceived as the norm, just ‘the way business is done.’ Addressing such deeply ingrained issues calls for a concerted and sustained effort, where organizational values, ethics, and accountability become the bedrock upon which the new culture is built. This transformation may not happen overnight, but it is essential to create an environment where integrity and ethical conduct prevail over any corrosive practices that may have been tolerated in the past.
3. Data Protection & Privacy
In our evolving digital age, data protection and privacy are essential. Businesses must be aware of the laws and regulations that apply to their data collection efforts and strategies and take steps to protect the privacy of their customers and employees.
Data protection and privacy are not just the responsibility of someone like a compliance officer or Information Technology leader but of every employee.
The landscape of digital risk management has evolved significantly, transcending its traditional confines within the IT department. Now the gravity of this issue extends to the boardroom. The relentless capabilities of malicious actors to infiltrate data, systems, and networks, potentially grinding a company’s operations to a halt, have made it a paramount concern for top-level executives.
Digital risk management encompasses a broad spectrum, spanning critical areas such as business continuity, operational management, and safeguarding the company’s reputation. No longer relegated to a technical concern, it has become a strategic imperative, demanding the attention and concerted efforts of leadership to navigate the complex web of threats that can compromise a company’s integrity and future success.
4. Competition and Antitrust
Businesses must understand what key laws and regulations govern competition and must avoid engaging in anti-competitive practices. Success is about embracing a holistic strategic approach.
As referenced in our webinar, Antitrust Compliance: Emerging Risks and Best Practices, when it comes to effective risk management, organizations must broaden their focus beyond just adhering to legal principles. While compliance with the law is paramount, it is equally vital to consider the broader spectrum of behavior, company culture, and your approach to competition and antitrust regulations training. Understanding and mitigating risks necessitates a comprehensive approach that goes beyond mere legal compliance. It entails a deep understanding of the nuances within your industry and the evolving landscape of regulatory frameworks.
To stay ahead, organizations must be proactive, constantly implementing changes and adopting best practices throughout their policies, and strategies, and, crucially, setting the right tone from the top. In this dynamic environment, a holistic risk management strategy that encompasses culture, compliance, and continual improvement is essential for long-term success.
5. Information Security
Cybercrime is expected to globally cost $10.5 trillion 2025. Information security is critical for businesses of all sizes. Businesses need to protect their data from unauthorized access, use, disclosure, disruption, modification, or destruction.
Cybercrime has become quite complicated over time and education is imperative to drive data protection. In today’s digital age, recognize your employees are vulnerable targets when it comes to cyberattacks. Threats such as phishing attacks, social engineering, and whale hunting specifically target human weaknesses. Cybercriminals often exploit the trust, curiosity, or lack of awareness of individuals within an organization to gain access to sensitive information or compromise security.
It is not just a matter of technical defenses; it is about ensuring employees are well-informed and equipped with the knowledge and skills to identify and thwart threats. Cybersecurity awareness and training are integral components of safeguarding your organization against the ever-evolving landscape of cyber threats.
6. Environmental, Social, Governance (ESG)
Close scrutiny is being paid to how companies’ operations impact the environment and society, as well as what governance practices are in place to ensure accountability. ESG is becoming increasingly important for businesses, as investors and consumers are demanding that companies operate more sustainably and with greater integrity.
The intricate task of aligning your business values, ethics, statements, commitments, relationships, and transactions with both current and anticipated ESG requirements is a challenge. It is a dynamic process that impacts corporate ethics and compliance training and shapes the foundation of an organization’s reputation and sustainability.
Ensuring your organization is in alignment with evolving ESG standards involves regulatory compliance and a genuine commitment to responsible business practices. It requires continuous assessment, adaptation, and education, ensuring your workforce is equipped to navigate the intricate landscape of ethical and sustainable business in an ever-changing world.
How SAI360 Can Help
To learn more about how SAI360 Learning can help your organization, request a demo and set up a virtual coffee chat with one of our team members: https://www.sai360.com/request-demo