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Electronic Data Protection, Data Privacy are Top Business Ethics and Corporate Compliance Risks
Companies Face Obstacles from Employee Fears, Corporate Resources and International LocalesLos Angeles, Sept. 2, 2008 – Enterprises worldwide cite electronic data protection and data privacy as their top two business ethics and corporate compliance risks, according to the 2008 LRN Ethics and Compliance Risk Management Practices Report. While companies report their programs are more robust, values-based and innovative in nature than reported in 2007, challenges include extending reach internationally, perfecting the risk detection process and finding adequate resources to support their objectives.
Further, despite the product safety concerns that emerged in 2008, the majority of companies are not extending their programs to their supply chains and partner communities, according to LRN, a company that helps businesses develop ethical corporate cultures. Companies are, however, reporting greater involvement from company leadership. Among the trends uncovered in the 2008 LRN Ethics and Compliance Risk Management Practices Report: • Data Risks Outpace Conflicts of Interest, Harassment and Corruption as Top Concerns: Over half of companies in all industries are focused on ensuring that their ethics and compliance programs cover data protection and privacy risks. Compliance with electronic data protection and privacy laws has migrated beyond traditional IT functions into the compliance and ethics area due to new, more stringent regulations in both the United States and Europe. Enterprises also cite intellectual property, environmental health and safety issues, corruption and bribery, sexual harassment, and conflicts of interest as key risk areas.
• Company Programs Are More Robust, Values-based and Innovative: There are positive signs that ethics and compliance efforts are progressing, with more companies developing confidence in their abilities to manage and mitigate risks. Almost nine in 10 companies perform a formal ethics and compliance risk assessment, for example, with more than half integrating it into other business risk assessments. Similarly, more than nine in 10 companies have codes of conduct or offer internal communications, and almost the same number offer online education courses. Further, at least seven in 10 companies are using evaluations to benchmark, set metrics and improve their programs. Data also supports a movement beyond compliance with a 40 percent increase in the number of companies that conduct formal cultural assessments, giving more insight into how companies are operating according to their values. Further, early adopter companies (10 percent) are adding interactive gaming to engage millennial learners. • Board Members and Company Leaders Are Increasingly Engaged: Company leaders are doing a lot more than just ensuring "tone at the top.” In 2008, more than three times as many companies involve their board of directors in the risk assessment process compared to 2007. Most importantly, two-thirds of respondents share the findings of the risk assessments with their board and their senior executives, ensuring that top leadership participates in the responsibility for shaping responsible business conduct. There was a significant increase since 2007 in the number of companies (nearly eight in 10) that provide formal ethics and compliance education to their CEO and senior management.
• Companies Remain Challenged in Engaging International Locations: As in 2007, companies are still challenged in extending their reach internationally. In fact, multinational firms gave themselves lower ratings for both accuracy and timeliness of their risk management efforts at their regional offices in other countries as compared to their headquarter location. • Supply Chain Programs Remain Immature: In this same regard, less than one-third of multinational companies are extending ethics and compliance efforts to parties that work closely with them, even though their violations could directly affect their company. Only about one in 10 multinationals offer education to resellers, two in 10 to suppliers and three in 10 to business partners in their headquarter location, and the results were even lower in their regional locations. • Detecting Violations and A Lack of Resources Still Present Significant Challenges: Despite the prevalence of anonymous reporting channels, almost two-thirds of companies believe employees fear retaliation while nearly half cite employees’ lack the motivation to report as key challenges in detection. Additionally, like the 2007 report, half the respondent companies cited lack of resources as the primary challenge they face when doing risk assessments and providing ethics and compliance education and/or certification activities and programs. Marjorie Doyle, global practice leader, Ethics and Compliance Solutions at LRN, said, “The best business environments are based on trust, transparency and self-governing behavior by embedding values and principles into corporate culture and the hearts and minds of their employees. Yet, it can be difficult to inspire values-based behaviors universally while ensuring local relevance too. This study confirms our continued efforts to assist companies in realizing, addressing and preventing risks, and shaping values-based cultures and workplace conduct that provides business advantage.”
About the 2008 LRN Ethics and Compliance Risk Management Practices Report Conducted between February and May 2008, LRN surveyed over 460 senior ethics, compliance, legal, and risk and audit professionals. All respondents were involved in some aspect of their company’s ethics and compliance programs, with 50 percent having primary responsibility for their organizational initiatives. A wide spectrum of industries is represented in the survey with 40 percent of respondents from companies with 10,000 or more employees, and 47 percent with less than 5,000 employees. Two-thirds of respondents have operations in two or more regions of the world.
About LRN
LRN is the global leader in business ethics and corporate compliance management solutions, enabling companies to drive business performance through values-based corporate cultures. The company provides executive insights, management tools and workforce education that make responsible conduct part of everyday business practice. LRN is the trusted partner to leading businesses worldwide, including Disney, Dow Chemical, eBay, Johnson & Johnson, Procter & Gamble, Raytheon and 3M. Founded in 1994, the company operates in more than 120 countries, with headquarters in Los Angeles and offices in New York, London and Mumbai. About LRN ### |
