CEO Monthly July 2017

8 CEO MONTHLY / JULY 2017 , “As we’ve seen for decades, no organisation is immune to unethical behaviour,” said Don Fancher, Deloitte risk and financial advisory principal and U.S. forensic leader, Deloitte Financial Advisory Services LLP (US), and global forensic leader. “But, the field of ethics compliance is evolving, as professionals’ skillsets, technologies to help hone and monitor programmes, and multi- jurisdictional regulator coordination all improve. Now is a great time for global organisations to take a hard look at modernising their ethical compliance programmes—particularly for those relying heavily on employees to report misconduct.” Less than one-third (32.5%) of execs polled are highly confident their organisations’ employees will report unethical behaviour. Executives say the biggest challenges to employees complying with global ethics programmes include inconsistency of clear, concise and frequent ethics programme communications and training for all employees (28.5%); lacking incentives and repercussions around ethical and unethical behaviour, respectively (16.3%); varied ethical postures of third parties with whom employees regularly interact (14.8%); and, differing ethical standards for various employee groups (12.5%). “Whether they need to monitor internal, external or both aspects of culture risk, we see leading companies leverage technology to modernise their compliance programmes,” said Carey Oven, Deloitte risk and financial advisory partner, Deloitte & Touche LLP. “Some use cognitive solutions to identify anomalous employee behaviours. Others use advanced analytics to identify third-party patterns. The learnings from culture risk detection systems can help enhance the information leadership teams use to make decisions around ethics compliance policies and procedures.” Questions to ask of your global ethics programme include: Do all leaders support the programme? Strong ethics programmes are organisation- wide with ongoing, full C-suite and board attention, as opposed to being managed by the general counsel or chief compliance officer alone. For example, chief accounting officers and CFOs can help unearth bribes, fraud and other illicit schemes that may be hiding in the books; or, by working with leaders across the C-suite, CISOs and CTOs can help discern what ethical weaknesses may lead to a higher frequency and intensity of cyberattacks. Is the whistle-blower hotline or speak-up line evolving? The level, frequency, and type of reports via whistle-blower communication channels can be telling. Testing—sometimes leveraging advanced analytics or other tools—can help discern reasonable levels of reporting and false positives, so that anomalous reports are more easily identified and more quickly investigated. Are employees surveyed to gauge ethics culture? By surveying employees about ethical standards and behaviours on an annual basis—as well as in exit interviews— organisations can make better informed updates to standards language, employee training and communications. Employee feedback can also help identify disparate subcultures in which interpretations of ‘ethical’ behaviour is inconsistent with the rest of the organisation. Is third-party due diligence conducted annually at minimum? It’s not unusual to perform background checks around third parties upon entering new contracts. But, personnel changes, financial strain, and other factors can change cultures quickly. Leveraging everything from annual third-party surveys to more covert social media analytics can help organisations understand with whom they’re doing business. About the online poll More than 930 c-suite and other executives responded to poll questions during the Deloitte Dbriefs webcast, ‘Global ethics and compliance in uncertain times: Levelling the playing field,’ on May 24, 2017. Respondents largely work in the financial services (27.7%), consumer and industrial products (23%) and technology, media and telecommunications (9.1%) industries. Answer rates differed by question. www.deloitte.com/us More than half (52.4%) of C-suite and other executives say global corporate ethical behaviour has improved since the enactment of the Sarbanes-Oxley Act in July 2002, according to a recent Deloitte poll. Yet, challenges remain as only 41.3%of execs say their organisations’ global ethics cultures are strong. Global Corporate Ethical Behaviour Improves, Challenges Remain