The LRN ethics and compliance risk management practices report

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% Respondents 17% % Respondents 17% % Respondents 40% 1 location 27% 40% 1 location 4 - 6 locations 40% RESPONDENT PROFILE 1 location Number of Employees 27% 4 - 6 locations 27% Number of Employees 4 - 6 locations Number of Employees 16% 16% 16% Budgets (excluding salaries) 2 - 3 locations 10,000+ 40% 31% Less than 2,500 2 - 3 locations 10,000+ Although nearly one-quarter (23%) of respondents 2 - 3 locations did not know their budgets, those 40% 31% Less than 2,500 10,000+ 40% 31% Less than 2,500 who did reflected a wide range of dollar % allocations: Respondents 47% had under $250,000; 14% had % Respondents $250,000 to $500,000; 7% had $500,000 % Respondents to $1M; and 9% had more than $1M. 13% 16% 13% 16% 13% 16% Budget 5,001 - 10,000 2,501 - 5,000 Budget 5,001 - 10,000 2,501 - 5,000 Budget 5,001 - 10,000 2,501 - 5,000 I don’t know I don’t know % Respondents I don’t know 23% % Respondents 23% % Respondents 23% 9 years and 9 years more 9 and years more and more 6 - 6 - 6 - Ethics Ethics Ethics 11+ 11+ 11+ 47% $500k+ 16% 47% $500k+ 16% 16% 47% $500k+ 14% 14% 14% $250k - $500k $250k - $500k $250k - $500k % Respondents % Respondents % Respondents Under $250k Under $250k Under $250k 5 -10 5 -10 5 -10 Budget %Respondents Under $250K 47% Budget $250K - $500K %Respondents 14% Under $250K $500K+ 47% 16% $250K - $500K I don't know 14% 23% $500K+ 16% I don't know 23% Ethics and Compliance Under $250K $250K - $500K $500K+ I don't know Ethics and Budget by Under $250K - $500K+ I don't Compliance Company Under 2,500 Size$250K $500K know 75% 7% 2% 15% Budget by Company 2,501 - 5,000 57% 12% 13% 18% Under 2,500 Size 5,001 - 10,000 75% 48% 7% 16% 2% 18% 15% 18% 2,501 - 5,000 10,000+ 57% 20% 12% 21% 13% 28% 18% 32% 5,001 - 10,000 48% 16% 18% 18% 10,000+ E&C employees 20% %Respondents 21% 28% 32% 1 14% E&C employees 2-5 %Respondents 45% 1 5-10 14% 15% 2-5 11+ 45% 24% 5-10 15% unknown 2% 11+ 24% unknown 2% Budgets vs. Company Size and Type of Industry What is surprising is that larger company size did not uniformly correlate with having the largest ethics and compliance budgets. Of course, the majority (69%) of smaller companies had the smallest budgets of under $200,000 but more than 25% of smaller companies had budgets of either $250K-$500K or $500K to $1M. Conversely, while 45% of companies with more than 50,000 employees had budgets of more than $1M, 26% of the larger companies had budgets of only $500,000 to $1M, the same percentage as smaller companies with less than 5,000 employees. 15% 2% 7% 75% 15% 2% 7% Under 2,500 75% Ethics and Compliance and budget by Company Size Ethics and Compliance and budget by Company Size 13% 12% 57% 18% 18% 18% 18% 13% 12% 57% BudgetI don't know I don't $500K+ know $500K+ $250K - $500K $250K Under - $500K $250K Under $250K 18% 16% 48% 32% 28% 21% 20% Under 2,500 2,501 - 5,000 20% 2,501 - 5,000 5,001 - 10,000 Employees 5,001 - 10,000 10,000+ Employees 10,000+ Budget 18% 16% 48% 32% 28% 21% 60% 40% 20% 0% 100% 80% 60% 40% 20% 0% 100% 80% Operating Regions LRN | 2008 Ethics and Compliance Risk Management Practices Report | 46 Ethics & Compliance Department Maturity Ethics & Compliance Department Maturity Unknown
RESPONDENT PROFILE Level of regulation does not correlate to budget The industry level of regulation does not predict the size of the ethics and compliance budgets. Of the companies from highly regulated industries, 44% have a small budget under $250K – and conversely, 45% of the companies with a large budget of $500K or more are not highly regulated. Meanwhile, 18% of the very large companies with more 10,000 employees have smaller budgets of under $250K, even though nearly 40% of them are from highly-regulated industries. The correlation of budgets to company size and degree of regulation defies explanation, other than the fact that companies vary greatly in their resources as well as the degree to which their specific industry requires larger resources to comply with regulations. Some industries such as financial banking may be able to survive on a lesser budget to achieve compliance, compared to a company in oil and gas exploration, pharmaceuticals or agriculture whose dangers translate into more dollars needed to meet their compliance requirements. Survey and statistical methodology The survey was completely anonymous and each respondent could take the survey only once. The survey questionnaire included multiple choice questions developed in collaboration with experts in the ethics and compliance risk assessment field. Significance has been analyzed using the chi-square statistics. The threshold for reporting differences or relationships as statistically significant is: p < 0.05. This survey was selfadministrated using the Instant Survey online tool from GMI (Global Market Insite, Inc.). Rounding may occasionally cause some total results to add up to greater than 100 percent. ® For more information, visit www.lrn.com or contact us at: 800-529-6366 North America +1-310-209-5400 Global www.lrn.com ©2008 LRN (07/08) LRN Headquarters 1100 Glendon Avenue Seventh Floor Los Angeles, CA 90024 USA New York One East 52nd Street Third Floor New York, NY 10022 USA London Aldwych House 71/91 Aldwych London WC2 UK Mumbai 11 Sahakar Road Vile Parle (East) Mumbai - 400 057 India
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 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
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