The LRN ethics and compliance risk management practices report

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DETAILED RESULTS for reporting. Despite all these organizational efforts, employees remain reluctant to step forward to report violations. Possible causes: a) employees may be uncertain about whether their reports will truly remain confidential which indicates that they did not receive a clear message that confidentiality is valued; b) the increasing number and complexity of regulations might fuel worker confusion and to some extent ignorance about what to report and what will happen if they do so. This is consistent with some survey results: nearly 3 in 10 companies say their employees just don’t understand the rules, suggesting that the fault may really lie within organizations to do a better job educating their employees and inspiring them to take greater responsibility for helping to build an ethical culture. RESPOND 14. Who typically is involved in investigations arising from reports of violations 2008 6900% 6600% 6500% 5000% te 900% 700% s 600% 500% 400% %Respondents ts 3800% 2000% 1400% 1300% 1100% 400% 300% 100% 100% %Respondents 3300% ts 2800% 1900% 1800% 1700% 1500% 1100% 500% 500% Ethics and Compliance Violations ompliance Violations Legal, Ethics and Compliance, Human Resources and Audit are the four functions mostly involved in investigations. Ethics & Compliance Ethics & Compliance HR Legal Audit 69% HR 66% Legal 65% Audit 50% HR Standing committee HR to investigate 9% Standing committee Special to committee investigateper allegations 7% Special committee per allegations Outsource Other Outsource 6% 5% Other 4% 69% 66% 65% 50% 9% 7% 6% 5% 4% Functions Participating in Investigations % Respondents 0% 20% 40% 60% 80% 100% The high participation of these four functions in ethics and compliance investigations is clearly expected, due to the nature of most allegations involve people and the potential legal impact they might have on a company. The generally balanced nature of their response rates indicates that companies use the various functions according to the nature of the violation, which again is logical. Functions Leading Investigations Functions Leading Investigations Functions Participating in Investigations 0% 20% 40% 60% 80% 100% % Respondents F Functions L % Respondents 0% 10% 20% 30% % Respondents 40% 50% 0% 10% 20% 30% 40% 50% Ethics & Compliance 38% Ethics & Compliance Audit HR 38% Audit 20% HR 14% Legal 20% 14% 13% Legal 13% HR 11% HR Varies 11% Varies 4% Other 4% 3% Corporate Other Securities 3% 1% Corporate Securities 1% ERM 1% ERM 1% 0% 10% 0% 10% 20% No sign. challenges No sign. challenges Insufficient Resources 33% Insufficient Resources Insufficient 28% training Insufficient Uncooperation training from colleagues 19% Uncooperation from Difficulties colleagues in investigation 18% Difficulties in investigation Too few investigators 17% 33% 28% 19% 18% 17% 15% Too few investigators Don't know Don't 15% know 11% Other 11% 5% Too Other many false 5% reports 5% Too many false reports 5% LRN | 2008 Ethics and Compliance Risk Management Practices Report | 34
Top Challenges %Respondents No sign. challenges 3300% Top Challenges Insufficinet Resources %Respondents 2800% No sign. Insufficient challengestraining 3300% 1900% Insufficinet Uncooperation Resources from colleagues2800% 1800% Insufficient Difficulties training investigation 1900% 1700% Uncooperation Too from few colleagues investigators 1800% 1500% Difficulties in investigation Don't know 1700% 1100% Too few investigators Other 1500% 500% Don't Too many know false reports 1100% 500% Top Challenges Other in Investigating 500% Ethics and Compliance Violations Too many false reports 500% Top Challenges in Investigating Ethics and Compliance Violations Special committee per allegations Special committee per allegations Outsource 6% Outsource Other 5% 15. Which function typically leads your investigations Other 4% 6% 5% 4% DETAILED RESULTS Ethics & Compliance function leads investigations in 1 out of 3 companies. Functions Leading Investigations Functions Leading Investigations Ethics & Compliance Compliance 69% HR HR Legal 66% Legal Audit 65% Audit 50% HR mmittee to HR investigate 9% e mmittee to investigate per allegations 7% per allegations Outsource 6% Outsource Other 5% Other 4% % Respondents 0% 10% 20% 30% % 40% Respondents 50% Functions Participating in Investigations 0% 10% 20% 30% 40% 50% Ethics & Compliance Functions Participating in Investigations Ethics & Compliance Audit 38% 38% 20% % Respondents Audit HR 20% 14% 0% 20% 40% 60% % Respondents HR 80% Legal 14% 13% 100% 0% 20% 40% 60% 80% Legal HR 13% 100% 11% 69% 66% 65% HR Varies 11% Varies Other 4% Corporate Other Securities 3% 4% 3% 1% 50% Corporate Securities ERM 1% 1% ERM 1% 9% 7% 6% 5% 4% The majority of companies did not designate a single leader in investigations. This indicates that companies consciously select the leadership role according to the nature of the allegations in order to utilize the most relevant function for the investigation. A lack of clarity thus exists about how companies lead their investigations. This requires further study to ensure that the best practice of either teaming departments or assigning leadership based on relevant knowledge and skills is being followed. 16. What are your biggest challenges in investigating allegations Leading Investigations ing Investigations % Respondents 30% % 40% Respondents 50% 30% 40% 50% One third of respondent companies have no significant challenges in investigations. Functions Leading Investigations Functions Leading Investigations % Respondents 0% 10% 20% 30% % Respondents 40% 50% 0% 10% 20% 30% 40% 50% No sign. challenges No sign. Insufficient challenges Resources 33% 33% 28% Insufficient Insufficient Resources training 28% Uncooperation Insufficient from training colleagues 19% Uncooperation Difficulties from colleagues in investigation 18% Difficulties in Too investigation few investigators 17% Too few investigators Don't know 15% Don't know Other 11% Too many Other false reports 5% Too many false reports 5% 19% 18% 17% 15% 11% 5% 5% Companies have been managing ethics and compliance investigations for many years, so it is likely that the more mature processes in place in investigating can explain the higher percentage of companies that report no significant challenges with investigations (33%) compared to companies that cite no challenges in assessing ethics and compliance risks (12%) or preventing risks (10%). These findings are in line with 2007 findings. LRN | 2008 Ethics and Compliance Risk Management Practices Report | 35
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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
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Page 27 and 28: DETAILED RESULTS Lack of adequate r
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Page 31 and 32: DETAILED RESULTS terms of budget an
Page 33: Anonymous/Confidential Reporting Ch
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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
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Page 47: RESPONDENT PROFILE Level of regulat

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