Fraud is never far from the headlines. In 2015, one of the biggest incidents of corporate fraud that dominated the news was that of German automobile giant Volkswagen, which came under fire for inserting a “defeat device” in its diesel engines to cheat on emission tests. Today, the company is contending with potential regulatory fines and compensation cases from customers, as well as major reputational repercussions that have severely affected its market share.
Meanwhile, in another instance of fraud, electronics conglomerate, Toshiba was found to have overstated its earnings by nearly $2bn over seven years, more than four times its initial estimate. With scandals such as these in the limelight, attention to ethics in the workplace has gained momentum.
Every organisation needs to have a compliance strategy in place to determine potential risks, identify ways to mitigate them in time and outline a future course of action. These strategies need to extend to the department level where compliance violations and issues can often pose a threat to organisational reputation. Programmes, processes, and technologies need to be in place to identify, prioritise, investigate, and address compliance violations and risks before they morph into black swan events. Strong policies and processes are also important in mitigating these risks.
In fact, having a robust corporate compliance programme helps organisations maintain compliance with external regulations, as well as internal policies and processes. Training employees on policies also goes a long way towards ensuring an ethical environment. But building a successful compliance and ethics programme can often be challenging. So how can you be ready to deal with risks that you haven’t faced yet? Here are five best practices:
(1) Be proactive in managing compliance and ethics
An organisation’s readiness to handle a compliance issue is critical as it impacts brand value and profitability. To that end, successful businesses need to be proactive in terms of establishing controls and processes, defining accountability, and centrally managing compliance requirements so that they are easily accessible to all concerned departments.
Being proactive also requires the corporate compliance team to collaborate with other departments and regulatory compliance groups to manage their compliance processes, controls, templates, and timelines. This approach gives the corporate compliance team comprehensive visibility into organisational compliance, so that they can perform regular or ad-hoc assessments to minimise violations.
Continue reading to find out how compliance is a continuous process that requires businesses to keep setting new goals.
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