ETHICS AND COMPLIANCE RISK MANAGEMENT Improving business performance and fostering a strong ethical culture through a su

1. ETHICS AND COMPLIANCERISK MANAGEMENTImproving business performance and fosteringa strong ethical culture through a sustainable process Presented by MUHAMMAD YAHYA AHMAD College of Education and Allied Program PCU, Manila

2. Risk Management Model • Enterprise risk management (ERM) is the process of aligning competitive strategy with the mechanisms that identify, aggregate, mitigate, avoid and transfer risk. • The goal is to reduce losses while seizing opportunities • ERM guides directors and executives as they coordinate the myriad tasks to identify the potential risks encountered by individual employees, business units, geographic divisions and corporate leadership.

3. Five steps for building a sustainableethics and compliance process • Define ethics and compliance risk • Prevent ethics and compliance lapses/ failures • Detect noncompliance • Respond to allegations and violations • Evaluate results and continuously improve

4. DEFINE ETHICS AND COMPLIANCE RISK • Access risks • Map risks to employee • Policies, procedures • Aligned with risks

5. DEFINE ETHICS AND COMPLIANCE RISK • Accounting breakdowns, including fraud, inaccurate recordkeeping, inappropriate record retention or destruction and noncompliance with the requirements • Business ethics failures, such as the exposure of confidential client information, conflicts of interest and giving and accepting inappropriate gifts • Employment related risks, like equal opportunity violations, workplace harassment and immigration offenses • Fair trading laws, which cover price fixing, abuse of dominance and collusion • Customer and workplace violations, for example, aiding and abetting illegal customer acts and creating unsafe workplace conditions • Product issues such as product safety failures and intellectual property violations, e.g., patent infringement

6. PREVENT ETHICS AND COMPLIANCE LAPSES/FAILURES • ‘Tone at the top’ • Education • Communication • Rewards

7. PREVENT ETHICS AND COMPLIANCE LAPSES/FAILURES • Set up the standards and procedures, and other aspects of the compliance and ethics program • Education: conducting effective training programs • Promoted an organizational culture that encourages ethical conduct and a commitment to compliance • Implementing feedback loops that maintain constant supervision over business units, job functions and individual employees that matching identifies as high-risk.

8. 5 Keys to effective education • Engage corporate leadership to drive successful ethics education • Promote the benefits of interactive engagement drawn from new developments in e-learning • Combine the geographic breadth of ethics education with a focus on professional relevance • Move beyond the “carrot-and-stick” approach • Create certification programs that attest to effective education and compliance

9. DETECT NONCOMPLIANCE • Early-warning systems • Controls for rapid detection • Employee certification • Self-reporting channels • Compliance monitoring • Compliance audits

10. DETECT NONCOMPLIANCE • Preliminary assessment • Complete assessment and notification of appropriate personnel • Investigation strategy • Document collection and interviews • Written report and presentation of findings • Report to employees

11. RESPOND TO ALLEGATIONS AND VIOLATIONS • Case identification, • Investigation and closure • Corrective actions • Perform root cause analysis • Communicate resolution

12. EVALUATE RESULTS AND CONTINUOUSLY IMPROVE • Metrics and benchmarks • Policies, practices and procedures against comprehension • Ongoing risk assessment • Reports and action • Systems improvement