Ethics and Corporate Risk Management: Improve Business Performance through a Strong, Ethical Culture

Events that can damage a company's reputation, including compliance problems caused by new or existing regulations, are the most significant issues facing business today. New data also suggest that companies with reputations for ethical leadership enjoy higher stock prices, lower costs and less employee turnover.

Enterprise Risk Management (ERM) is a process of aligning competitive strategy with mechanisms that identify, aggregate, mitigate, avoid and transfer organizational and compliance risk. Ethics and corporate risk management serve as an ideal model and testing ground for a holistic, ERM-focused approach. It uses all the enterprise risk management components to achieve objectives in all the categories defined by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2004.

In fact, the "E" in enterprise risk management could just as easily stand for "employee." As the old adage says, an organization is only as good as its people. This is especially true when giving employees an introduction to business ethics, when successful corporate risk management depends as much on how leadership and culture influences employee behavior as on quantifiable controls and procedures.

An integral component of enterprise risk management is to holistically build a strong control environment with a culture of corporate ethics, by defining, preventing, detecting, responding and evaluating as part of five key steps for building a sustainable corporate risk management process:

1. Define business ethics and corporate risk management to create a comprehensive risk profile.
2. Prevent ethics and compliance lapses/failures with hard and soft controls, including ethics education.
3. Detect noncompliance with the law, regulations, company code of ethics and corporate governance practices via multiple reporting channels.
4. Respond swiftly and publicly to allegations and potential violations.
5. Evaluate results and make continuous improvements.

Since 1993, LRN has been a pioneer in the field of ethics and corporate risk management training, helping nearly 300 companies put effective corporate ethics training and foundational corporate risk management programs into practice.

While companies have traditionally measured the success of their compliance risk and ethics training programs by employee completion rates, LRN believes that compliance education should include instilling the underlying corporate values of an ethical business culture. Here are five keys to do so effectively:

1. Engage corporate leadership to drive successful ethics training programs.
2. Promote the benefits of online compliance training and ethics education drawn from new developments in e-learning.
3. Combine the geographic breadth of a global business ethics education with a focus on professional relevance.
4. Move beyond the "carrot-and-stick" approach by appealing to our noblest aspirations and values-based instruction.
5. Create certification programs that attest to effective ethics education and corporate compliance.

LRN's dedicated team of 350 professionals brings a wealth of experience – ranging from academia to business to technology – to work with you to create communication and educational training tools that promote and reinforce your code of business conduct and overall compliance program. Go to LRN.com to learn how you can develop an ethics and compliance training program as part of a corporate risk management strategy that will inspire principled performance throughout your organization.