The LRN ethics and compliance risk management practices report

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DETAILED RESULTS Insufficient resources lead the list of challenges for other companies. However, 28% of respondent companies cite insufficient resources, making investigations the third area – along with risk assessments and prevention -- where companies do not have enough staff or budget. In some industries, such as financial or medical, investigations can be costly, requiring extensive legal research and documentation. This suggests that it behooves companies to plan their budgets with the knowledge that, should they be required to investigate a major violation, they will need sufficient resources and should plan for that contingency. 15% to 20% of companies cite insufficient training, lack of cooperation from colleagues, difficulties doing the investigations, and too few investigators as key challenges. This suggests that hiring and training staff is critical in companies new to investigations or not yet having a mature, experienced group of ethics and compliance, human resources, or legal professionals to manage investigations with accuracy, fairness, and legal aptitude are contributing factors impacting investigations. But it also again reinforces that most companies have few challenges when it comes to responding to violations. All in all, investigations are critical for all companies. It’s always better for companies to discover their own problems first, and to be proactive and transparent in notifying the authorities about their findings in advance of government intervention and sanctions. aluation Methods %Respondents antitative ds measures %Respondents 4900% ernal suresprocess audits 4900% 4500% audits alitative measures 4500% 4200% rmal uresculture assessment 4200% 3500% ssessment alysis of data from all our programs 3500% 2800% ternal from all process our programs audits 2800% 1900% audits do not evaluate 1900% 1400% ate 1400% quency of evaluation %Respondents aluation %Respondents Ongoing 3400% Ongoing 3400% Annually 2300% Annually Occasionally 2300% 1400% Occasionally Quarterly 1400% 900% Quarterly Don't 900% know 900% Don't know No reporting 900% 900% No reporting 900% Improve our programs 7100% Utilizing the Improve Share our programs findings wih the 7100% board 5900% Utilizing the Information are findings Share wih the findings boardwith company 5900% 2000% Information from the Ethics are findings with company Don't 2000% know 1100% from the Ethics and Compliance Don't know 1100% Other 600% Do nothing 600% and Compliance Programs Other 600% Share findings Do nothing with stakeholders 600% 500% Programs Evaluations findings with stakeholders 500% Evaluations EVALUATING 17. How do you formally evaluate the impact of your overall ethics and compliance process There is nearly a 40% increase in percentage of companies conducting formal Evaluation Methods cultural assessments. Quantitative measures Quantitative measures 49% Qualitative measures Qualitative measures 45% Internal process audits Internal process audits 42% Analysis of data from all our programs Analysis of data from all our programs 35% Formal culture assessment Formal culture assessment 28% External process audits External process audits 19% We do not evaluate We do not evaluate 14% % Respondents % Respondents 0% 10% 20% 30% 40% 50% 0% 10% 20% 30% 40% 50% 49% 45% 42% 35% 28% 19% 14% Evaluation Methods Lack of adequate resources 3000% ack lating of adequate results to business resourcesimprovements 3000% 2500% to business improvements Correlating data to 2500% results 2400% Correlating data to results Don't 2400% know 2300% Agregating Don't know and analyzing 2300% data 2300% adequate gating and management analyzing data tools/technology 2300% 1900% ting agement data on tools/technology programs conducted 1900% at HQ 1600% rograms rams conducted conducted at international HQ 1600% regions 1400% ted at international regions 1400% Other 700% Other 700% 35% of the respondent companies indicated they conduct formal cultural assessment to evaluate the impact of their ethics and compliance program. This evaluation methodology is valuable because it allows companies to analyze their entire corporate culture on a holistic basis -- including risk assessment, work processes, employee attitudes, and many other Ongoing factors – all of which helps reveal the underlying corporate character. A mature Ongoing ethics and 34% compliance process must recognize that they can no longer achieve having a consistent Annually and Annually 23% reliable ethical culture through compliance alone. Isolated programs that comply with the Quarterly laws open too many gray areas open to interpretation where employees don’t Quarterly 14% know what Occasionally is right. Formal cultural assessments give companies greater insight into the Occasionally status of their 9% entire culture, especially how to move it beyond being simply rule-based towards becoming Don't know Don't know 9% values-based. Utilizing the Information from the Ethics and Compliance Programs Evaluations Utilizing the Information from the Ethics and Compliance Programs Evaluations % Respondents 0% % Respondents 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% No reporting No reporting 9% 0% 0% 10% 34% 23% 14% 9% 9% 9% Improve our programs Improve our programs 71% Share findings wih the board Share findings wih the board 59% Share findings with company Share findings with company 20% 71% 59% 20% LRN | 2008 Ethics and Compliance Risk Management Practices Report | 36
DETAILED RESULTS uantitative measures itative measures Qualitative measures itative measures ternal process audits l process audits from all our programs all our programs al culture assessment lture assessment xternal process audits al process audits We do not evaluate e do not evaluate Evaluation Methods Evaluation Methods % Respondents % Respondents 0% 10% 20% 30% 40% 50% 0% 10% 20% 30% 40% 50% 49% 49% 45% 45% 42% 42% 35% 35% 28% 28% 19% 19% 14% 14% As for other evaluation techniques, the largest percentage of companies uses quantitative or qualitative measures to assess the impact of their ethics and compliance processes. It is useful to point out that roughly 1 in 3 companies say they analyze data from their programs to evaluate their programs. Another data point is that only 20% of companies use external resources for evaluations. This may increase in future years as companies find they need to go to outside experts to obtain more objective, accurate evaluations. 18. How often do you evaluate the impact of your overall ethics and compliance process The use of ongoing evaluations is declining, with more companies performing annual evaluations. Frequency of Evaluation Frequency of Evaluation % Respondents Evaluation Methods %Respondents % Respondents Quantitative measures 4900% 0% 10% 20% 30% 40% 50% Evaluation Internal Methods process audits %Respondents 4500% 0% 10% 20% 30% 40% 50% Quantitative Qualitative measures measures 4900% 4200% Internal process Formal audits culture assessment 4500% 3500% Qualitative Analysis measures of data from all our programs 4200% Ongoing 34% Evaluation Methods 2800% Formal culture External assessment process audits 3500% 1900% Ongoing 34% Evaluation Methods Analysis of We data do from not evaluate all our programs 2800% 1400% External process audits 1900% Annually 23% We do not evaluate 1400% Annually 23% % Respondents Quarterly 14% % Respondents Frequency of evaluation %Respondents 0% 10% 20% 30% 40% 50% Ongoing 3400% Quarterly 14% Frequency of evaluation Annually %Respondents 2300% on from the Ethics and Compliance Programs Evaluations Occasionally 9% 0% 10% 20% 30% 40% 50% Ongoing Occasionally 3400% 1400% om the Ethics and Compliance Programs Evaluations Occasionally 9% Quantitative measures 49% AnnuallyQuarterly 2300% 900% Occasionally Don't know 1400% 900% Don't know 9% Quantitative measures 49% Quarterly No reporting 900% 900% Don't know 9% Qualitative measures 45% Don't know 900% % Respondents No reporting 900% No reporting 9% Qualitative measures 45% % Respondents Internal process audits 42% 40% No reporting 9% 60% 80% 100% Improve our programs 7100% Utilizing the 40% 60% 80% Share findings 100% Internal process audits 42% wih the board 5900% Information Analysis of data from all our programs 35% Improve Share our findings programs with company 7100% Utilizing the 2000% Share findings wih the board Don't know 5900% 1100% Information Share findings with company Other 2000% 600% from the Ethics Don't knowDo nothing 1100% 600% and Compliance Share findings with Other stakeholders 600% 500% Do nothing 600% Programs Share findings with stakeholders 500% Evaluations Lack of adequate resources 3000% Correlating results to business improvements 2500% Lack of adequate Correlating resources data to results 3000% 2400% Correlating results to business improvements Don't know 2500% 2300% Correlating Agregating data and to results analyzing 2400% data 2300% Lack of adequate management Don't tools/technology know 2300% 1900% Collecting Agregating data on and programs analyzing conducted data at 2300% HQ 1600% Collecting Lack data of adequate on programs management conducted tools/technology at international regions 1900% 1400% Collecting data on programs conducted at HQ Other 1600% 700% Collecting data on programs conducted at international regions 1400% Other 700% In 2008, from the 66% Ethics of respondents indicated they perform at least annual program evaluations, and Compliance Analysis of data from all our programs 35% Formal culture assessment 28% which Programs is in line with the industry best practices. In today’s world, compliance regulations Evaluations Formal culture assessment 28% may change from year to year, and companies External process must audits ensure they 19% remain up to date in their External process audits 19% programs. High rates of employee turnover We do can not also evaluate affect the 14% success of a company’s ethics and compliance programs. And We do even not evaluate though values 14% are universal and don’t change, companies must monitor their programs at least annually to determine their effectiveness in moving their culture successfully towards living those values. 19. What do you do with the information you derive from evaluating your overall ethics and compliance process Top Program Evaluation Challenges Top Program Evaluation Challenges The majority of companies use the information collected in evaluations to improve % Respondents their programs. % Respondents 0% 10% 20% Utilizing the Information from the Ethics 30% and Compliance 40% Programs 50% Evaluations 0% 10% 20% 30% 40% 50% Utilizing the Information from the Ethics and Compliance Programs Evaluations Lack of adequate resources 30% Lack of adequate resources 30% Correlating data to results 25% % Respondents Correlating data to results Correlating results to business improvements 25% 24% 0% 20% 40% 60% % Respondents 80% 100% Correlating results to business improvements 24% 0% 20% 40% 60% Agregating and analyzing data 23% 80% 100% Agregating and Improve analyzing our data programs23% 71% Lack of 23% Lack of adequate management Improve Share tools/technology our programs 71% 23% findings wih the board 59% Collecting data on programs conducted at HQ 19% adequate management tools/technology Collecting data on Share programs findings conducted wih the board at HQ 19% 59% Collecting data on programs conducted Share at international findings with regions company 16% 20% Collecting data on programs conducted at international regions 16% Share findings with company Don't know 20% 14% Don't know 11% Don't know 14% Don't knowOther 11% 7% Other Other 7% 6% Other 6% Do nothing 6% Do nothing 6% Share findings with stakeholders 5% Share findings with stakeholders 5% LRN | 2008 Ethics and Compliance Risk Management Practices Report | 37
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 and 26: Function 2008 Compliance 6300% Lega
Page 27 and 28: DETAILED RESULTS Lack of adequate r
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: Top Challenges %Respondents No sign
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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