The LRN ethics and compliance risk management practices report

TRENDS
ondents man
900%
000%
Respondents
2007 2900%
2008 4000%
ondents r Reporting
400%
Respondents
700% 2007 2400%
2008 1700%
2007 2008
000%
hallenges
6400%
2007 2008
500% etaliation 5400% 5000% 6400%
500% otivated 4600% 3500% 5400%
allenges 900% 4200% 4500% 4600%
300% s 3300% 2900% 4200%
anagement 700% 2800% 1300% 3300%
understand1900%
1700% 2800%
o 200% respond 1300% 900% 1900%
2200% 1300%
52%
2007
Increased use of internal ombudsman – Compared to 2007, more companies indicated
having an internal ombudsman – responsible for investigating and resolving issues – as a
potential channel for reporting violations, 40% in ‘08 vs. 29% in ‘07.
Internal Ombudsman
Internal Ombudsman
100%
58%
52%
2008 2007
80%
60%
40%
58%
20%
0%
100%
80%
60%
40%
20%
0%
2008 % Respondents
% Respondents
No Set Policies for Reporting
No Set Policies for Reporting
24%
17%
10%
17%
0%
0%
2007
2008 2007 % Respondents
2008
% Respond
More Companies having set policies for reporting violations – Compared to 2007, the
percentage of respondents indicating that their company has no set policies for reporting
decreased by 60%. In 2007, nearly one-quarter of respondents had no set policy for
reporting violations, whereas in 2008, only 17% responded having no reporting policy.
24%
50%
40%
30%
20%
50%
40%
30%
20%
10%
Top Detection Challenges
Top Detection Challenges % Respondents
% Respondents
0% 20% 40% 60% 80% 100%
0% 20% 40% 60% 80% 100%
50%
aliation
50%
mployees fear retaliation 64%
64%
35%
otivated
mployees not motivated 54%
45%
allenges
No significant challenges 46%
29%
ate uses
Inappropriate 42% uses
13%
agement
ck of formal management
33%
17%
derstand
ployees don't understand
28%
9%
respond
nsufficient staff to 19% respond
Other
22%
13%
2007
2008
Other
35%
54%
45%
46%
29%
42%
13%
33%
17%
28%
9%
19%
22%
13%
2007
2008
Evaluating Risks
Amendments to the US Federal Sentencing Guidelines call for organizations to “take
reasonable steps to evaluate periodically the effectiveness of the organization’s compliance
and ethics program,” including oversight by “high-level personnel.” 2 Similarly, Sarbanes-
Oxley Section 404 requires management to take responsibility for and assess the
effectiveness of internal controls and procedures. Several trends in how companies evaluate
their ethics and compliance programs point to weakening capabilities among companies
Formal Culture Assessment
to benefit from measuring their program effectiveness and using the results to create
Year
%Respondents
2007 2500%
improvements. While some 2008 survey findings are positive, several key evaluation practices
2008 3500%
are declining when compared to 2007.
Top Challenges in Evaluating in Ethics and Compliance Program 2007 2008
More companies
Correlating results
using
to business
a
improvements
formal cultural assessment
3300%
–
2500%
A significant increase occurred
Correlating data to results 3900% 2400%
in the number Aggregating of and companies analyzing data using a formal cultural assessment: 2900% 2300% 35% of respondents in 2008
Collecting data programs conducted at international regions 2200% 1400%
vs. only 25% of respondents in 2007. The more common use of formal cultural assessments
demonstrates that companies recognize the need to build awareness and create a value-based
culture rather than basing their programs simply on ensuring compliance with regulations.
Formal Culture Assessment
50%
40%
Correlating results
business improveme
35%
30%
Correlating data to resu
25%
20%
2007
2008
10%
0%
% Respondents
Aggregating a
analyzing d
Collecting data
programs conduc
at international regio
LRN | 2008 Ethics and Compliance Risk Management Practices Report | 15