The LRN ethics and compliance risk management practices report

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32% 10% 3% Conflicts of interest Supply Chain % Insider Respondents Trading 21% 20% 16% Frequency of Conducting Risk Assessments Less than once a year I do not know re than e a year 9% rmal or 14% hedule essment 8% 5% 25% Periodically as part of audit % Respondents 40% Annually 50% 40% 30% 20% 10% 0% % Respondents Other metrics 2100% Top Risk Assessment Challenges % Respondents Inadequate resources 4700% Obtaining accurate/ quantifiable info 3500% Conducting a global assessment 2600% Analyzing and applying the findings 2000% Insufficient technology 2000% DETAILED RESULTS Conducting risk No significant assessments challenges is the vital first step 1200% in risk management. As a tool for Don't know Top 800% Ethics and Compliance Risks identifying strengths Other and weaknesses in their ethics 300% and compliance efforts, the information collected from assessments is most valuable when it is communicated broadly to appropriate % Respondents parties, analyzed for relevance and potential gaps, and applied to improve the company’s 0% 20% 40% 60% 80% 100% prevention and detection programs. On this basis, the survey shows that most companies are Electronic Data Protection 52% not benefiting as much as they could from their risk assessments. Intellectual Property Mapping Risks Environment Health and Intellectual Property 29% Under 5,000 employees 11% Over 10,000 employees Data Privacy FCPA and Anti-bribery Sexual Harassment Export Controls Conflicts of interest Supply Chain Insider Trading 47% 32% 30% 27% 26% 23% 21% 20% 16% 50% 40% 30% 20% 10% 0% % Respondents % Respondents Ranking Findings 44% 27% 21% 80% 60% 40% 20% 0% % Respondents Specific employees or groups Other metrics Probability of occurrence Monetary value Other metrics ate resources uantifiable info al assessment ng the findings ent technology ant challenges 12% 0% Other 8% % Respondents Don't know 3% Top Risk Assessment Challenges 100% 0% 10% 20% 30% 40% 50% 47% 80% 35% 60% 26% 20% 40% 20% 20% Using information from Risk Assessment 71% 51% 43% Share findings Rank findings Map findings Apply findings to programs Other metrics Don't know Three out of four companies share their findings, though most do not gain the full value by communicating them with employees and managers. The fact that many companies say they lack the resources needed for the steps of the risk % Respondents 50% assessment process may explain why the majority do not rank or map findings. Only 5 out of 10 companies rank findings, with most Compliance of those companies 63% 40% doing so on the basis of probability of occurrence. Worse, only 3 in Legal 62% 10 companies map findings to specific employee 30% groups or other metrics. It may be that Internal their Audit HR systems 59% are not yet equipped with the 20% 29% advanced tools that can capture accurate Internal data Audito map 56% risks to specific groups or individuals. Both ranking and mapping are highly Human recommended, Resources 10% 51% as both practices could ultimately 11% help companies save money by being able Finance to more precisely 47% target their prevention and 32% 0% detection efforts. Ethics 44% 10% 3% % Respondents IT 39% Data Privacy 41% 6. What are the biggest challenges you face in conducting your Other ethics metricsand Risk Office 38% compliance risk assessment External Auditors Consultants Business managers Executive Team 34% 23% 22% 14% Lack of resources is the leading challenge in conducting risk assessments Top Risk Assessment Challenges Function % Respondents Mapping Risks 0% 20% 40% 60% 80% 100% Specific employees or groups % Respondents 0% 10% 20% 30% 40% 50% 21% Inadequate resources Obtaining accurate/ quantifiable info Conducting a global assessment Analyzing and applying the findings Insufficient technology No significant challenges Other Don't know 47% 35% 26% 20% 20% 12% 8% 3% LRN | 2008 Ethics and Compliance Risk Management Practices Report | 26 % Respondents
DETAILED RESULTS Lack of adequate resources was once again cited as the top challenge in conducting risk assessments, despite this year’s survey including a larger pool of respondents, more single-location companies (as opposed to global, multinational companies) and more large enterprises with over 10,000 employees. This suggests that not enough staff and/or budget is an ongoing issue for enterprises seeking to do comprehensive risk assessments. The repercussions of inadequate resources may provide the basis for understanding the next two leading challenges cited: obtaining accurate, quantifiable information and conducting a global assessment. Both of these require staff and dollars sufficient enough to devote adequate time and energy to collecting and analyzing data. Companies that lack resources may simply not have the staff to reach out to all departments to obtain accurate data or, if they are global, to assess every regional office to the same depth as their headquarters. Rethics &compliance risks 8,400% isks 7,600% 6,500% t development 5,800% ion5,400% 5,500% development 5,000% 5,200% 5,000% eviews/other 4,400% incentives 400% s 700% 600% frica Middle East 4900% 4800% 2600% 2300% 7500% 7100% 1500% 1800% 200% 300% 1700% 2100% PREVENT 7. What activities/programs does your company have in place to educate on and/or certify employees in specific ethics and compliance risks Most companies approach prevention using several methods of education. 0% 20% 40% % Respondents 60% 80% 100% Code of conduct/ethics 0% 96% 20% 40% 60% 80% 100% Code of conduct/ethics Internal communications 96% Internal communicationsOnline 92% education Online Classroom-offline education 85% education Classroom-offline education Written certifications 77% Written certifications Electronic certifications 74% Electronic certifications 69% Site visits Employee performance Site reviews/other visits 66% incentives Employee performance reviews/other incentives Interactive 63% Games Interactive Games No formal 60% programs Formal No formal CEO/senior programs mgmt 55% development Formal CEO/senior Management/leadership mgmt development 11% development Management/leadership development Other 10% 8% Other 92% 85% 77% 74% 69% 66% 63% 60% 55% 11% 10% 8% Educational Programs on Ethics and Compliance Risks Educational Programs on Ethics and Compliance Risks % Respondents Overall, companies uniformly implement their prevention programs via three methods: • codes of conduct • internal communications, and • online education The interactive games option was not included in 2007, but its use among 10% of Educational Programs on Ethics and Compliance Risks - Global Companies companies probably represents a new emphasis on engaging employees, especially those of % Respondents the Millennial generation who typically demand greater participation in their learning and 0% 20% 40% 60% % Respondents 80% 100% who often prefer interactivity as a way to deal with the unfamiliar. Both of these may be the 96% 84% beginning of growing movement to use materials that offer greater levels of engagement to 92% capture employee attention about ethics and compliance issues. This is bolstered by a later 76% survey finding that most companies say their two greatest challenges in prevention are the 85% lack of relevancy of materials and the lack of employee engagement. Educational Programs on Ethics and Compliance Risks - Global Companies Code of conduct/ethics 0% 20% 40% 60% 80% 100% 96% Code of conduct/ethics 84% Internal communications 92% Internal communications 76% Online education 65% 85% Online education 65% 77% Formal CEO/senior mgmt development 58% 77% Formal CEO/senior mgmt development 58% 74% Classroom-offline education 54% 74% Classroom-offline education 54% 69% Electronic certifications 55% 69% Electronic certifications 55% 66% Management/leadership development LRN | 2008 Ethics and Compliance Risk Management Practices Report | 27 50% 66% Management/leadership development 50% 60% Employee performance reviews/other incentives 50% Employee performance reviews/other incentives 60%
Page 1 and 2: ® Inspiring Principled Performance
Page 3 and 4: EXECUTIVE SUMMARY Increased global
Page 5 and 6: EXECUTIVE SUMMARY LRN’s Approach
Page 7 and 8: KEY FINDINGS To address these conce
Page 9 and 10: KEY FINDINGS 10 companies also offe
Page 11 and 12: 20 SIGNIFICANT RISK MANAGEMENT TREN
Page 13 and 14: 80% 52% 58% 60% 40% 20% TRENDS 42%
Page 15 and 16: TRENDS ondents man 900% 000% Respon
Page 17 and 18: Why Ethics and Compliance Risk Asse
Page 19 and 20: Educating a Diverse Workforce An In
Page 21 and 22: Avoiding the Pitfalls of Detection
Page 23 and 24: 2008 DETAILED RESULTS DEFINE 1. Is
Page 25: Function 2008 Compliance 6300% Lega
Page 29 and 30: Ot Workforce Outreach Workforce Out
Page 31 and 32: DETAILED RESULTS terms of budget an
Page 33 and 34: Anonymous/Confidential Reporting Ch
Page 35 and 36: Top Challenges %Respondents No sign
Page 37 and 38: DETAILED RESULTS uantitative measur
Page 39 and 40: DETAILED RESULTS Quarterly 4100% An
Page 41 and 42: DETAILED RESULTS It’s also a posi
Page 43 and 44: LRN ETHICS AND COMPLIANCE MARKET MA
Page 45 and 46: ,000 es r 5,000 loyees an 2,500 s t
Page 47: RESPONDENT PROFILE Level of regulat

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