The LRN ethics and compliance risk management practices report

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antitative measures 49% Qualitative measures ualitative measures 45% Internal process audits ernal process audits 42% Analysis of data from all our programs rom all our programs 35% Formal culture assessment l culture assessment 28% External process audits ternal process audits 19% We do not evaluate We do not evaluate 14% ing the Information from the Ethics and Compliance Programs Evaluations n from the Ethics and Compliance Programs Evaluations % % % 45% 42% 35% 28% 19% 14% % Respondents 0% 20% 40% % 60% Respondents 80% 100% 40% 60% 80% 100% DETAILED RESULTS At least 7 in 10 companies are pursuing a best practice to use evaluations of their programs to benchmark, set metrics in order to improve them. This is logical. However, only slightly Frequency of Evaluation more than half of companies share their findings Frequency with of Evaluation their board, and only 2 in 10 share them with the company. % Respondents % Respondents 0% 10% 20% 30% 40% 50% While sharing findings with a board 0% may 10% focus 20% on a level 30% of detail 40% many 50% boards do not need to know, it is likely to become Ongoing increasingly 34% important that boards stay abreast of all activities within their Ongoing companies 34% regarding ethics and compliance progress. Given that the Annually 23% U.S. Federal Sentencing Annually Guidelines 23% hold boards accountable for fostering an ethical culture, it behooves boards to open themselves Quarterly up further 14% to examining the progress and success of Quarterly 14% the company’s programs. Occasionally Occasionally 9% Don't know 9% 9% Similarly, companies Don't know can often 9% benefit by sharing the findings from their ethics and compliance program evaluations No reporting with their entire 9% organizations. Communicating the No reporting 9% company’s progress towards both compliance and culture change can be the turning point to motivate employees into treating ethics and compliance more seriously and taking greater responsibility for reporting violations. Open, honest information helps engage and enlist employees, and sends a strong signal that the company is serious about advancing a culture of responsibility and integrity. % 20. What challenges do you have evaluating overall ethics and compliance process Top three challenges are: Lack of adequate resources and Correlating data to results and/or business improvements. Top Program Evaluation Challenges Top Program Evaluation Challenges % Respondents % Respondents 0% 10% 20% 30% 40% 50% 0% 10% 20% 30% 40% 50% Lack of adequate resources Lack of adequate resources 30% Correlating data to results Correlating data to results 25% Correlating results to business improvements Correlating results to business improvements 24% Agregating and analyzing data Agregating and analyzing data 23% Lack of adequate management tools/technology Lack of adequate management tools/technology 23% Collecting data on programs conducted at HQ Collecting data on programs conducted at HQ 19% Collecting data on programs conducted at international regions Collecting data on programs conducted at international regions 16% Don't know Don't know 14% Other Other 7% 30% 25% 24% 23% 23% 19% 16% 14% 7% As in the case of conducting risk assessments and implementing prevention programs, companies indicate lack of resources as leading challenge for evaluating the ethics and compliance program. Roughly one-quarter of respondents cited correlating results to business improvements (25%) and correlating data to results (24%). These challenges suggest that companies do not yet have the skills and/or tools necessary to effectively utilize their program evaluations and turn the information into meaningful results to drive program enhancements as well as business improvements. LRN | 2008 Ethics and Compliance Risk Management Practices Report | 38
DETAILED RESULTS Quarterly 4100% Annually 3000% If Incident or Program 1600% Change Occurred We do not report 500% 21. How I do not know often 500% is the board updated on your ethics and compliance risk Other 400% management program The most common practice in evaluations is to update boards quarterly, or at least annually. Frequency of Reporting to the Board I do not know We do not report If Incident or Program Change Occurred 16% Other 5% 5%4% 41% Annually Quarterly 30% % Respondents 71% of respondents cited updating boards quarterly or at least annually. This suggests that boards increasingly recognize the need, as suggested by the Federal Sentencing Guidelines, to receive information more frequently and be more actively involved in ethics and compliance concerns. Depending on the industry, size of company, and frequency of board meetings, a best practice in most companies would be to report annually, if not quarterly. eliness 5700% Timeliness 0% 2800% 5700% 0% 1100% 2800% 0% 400% 1100% 0% 400% OVERALL SELF-ASSESSMENT 22. Rate your company capability to address and mitigate Ethics and Compliance risks with accuracy and in a timely manner The majority of companies are moderately confident about their ethics and compliance effectiveness. 1200% IR 0% 5100% 1200% 0% 2500% 5100% 0% 1200% 2500% 0% 1200% Ethics and Compliance Risk Ratings Ethics and Compliance Risk Ratings 100% 100% 80% 80% 60% 60% 1600% IR 0% 4400% 1600% 0% 2800% 4400% 0% 1200% 2800% 0% 1200% 7.0 8.0 6.0 7.1 7.1 7.8 6.2 7.0 7.0 8.0 6.0 7.1 7.1 7.8 6.2 7.0 HQ IR HQ IR 57% 57% 53% 53% 28% 24% 28% 24% 9 - 10 9 - 10 6 - 8 6 - 8 Accuracy Timeliness Accuracy Timeliness 19% 19% 11% 11% under 6 under 6 4% 4% 4% 4% no answer no answer 40% 40% 20% 20% 0% 0% % Respondents % Respondents 6.7 8.2 5.9 7.4 6.7 8.1 5.8 7.3 6.7 8.2 5.9 7.4 6.7 8.1 5.8 7.3 LRN | 2008 Ethics and Compliance Risk Management Practices Report | 39
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
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Page 21 and 22: Avoiding the Pitfalls of Detection
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Page 27 and 28: DETAILED RESULTS Lack of adequate r
Page 29 and 30: Ot Workforce Outreach Workforce Out
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Page 33 and 34: Anonymous/Confidential Reporting Ch
Page 35 and 36: Top Challenges %Respondents No sign
Page 37: DETAILED RESULTS uantitative measur
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Page 47: RESPONDENT PROFILE Level of regulat

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