2012 canadian centre for ethics - ethicscentre canadian centre for... · evolve. adapt. lead....
TRANSCRIPT
Evolve. Adapt. Lead. Succeed.
Canadian Centre for Ethics & Corporate Policy: Compliance & Ethics Program Best Practices
Andrea Falcione – Chief Ethics Officer & VP, Advisory Services
SAI Global Compliance (Americas)
February 29, 2012
Agenda
• Introductions
• Importance of a C&E Program
• Global Trends & Concerns
• Components of a C&E Program
2
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• Components of a C&E Program
• Building an Effective C&E Program
• Questions/Comments
� Multiple fully-staffed offices around the world
� Compliance Americas: 4 US locations
� Compliance EMEA: 2 UK locations
� Compliance Asia Pacific: 3 Australian locations
� 500 substantive clients, including 40% of the Fortune 100
companies, 30% of the Fortune 500
Introductions – SAI Global Compliance
3
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companies, 30% of the Fortune 500
� Oversee programs across 120 countries and in over 60
languages
� In-house expertise in a full complement of advisory services,
adult learning, and technology integration
Introductions – SAI Global Compliance, cont.
• Team of lawyers, paralegals, data analysts & professional writers
• Certified Compliance & Ethics Professionals
• Consult on various aspects of client programs, including:
– Compliance- and ethics-related risk assessments
– Code benchmarking, commentary and re-writing
4
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– Cultural assessments
– Assessment and remediation of conflicts of interest
disclosures
– Assessment of program effectiveness
– Training and communication benchmarking
– Conducting interviews and focus groups
Agenda
• Introductions
• Importance of a C&E Program
• Global Trends & Concerns
• Components of a C&E Program
5
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• Components of a C&E Program
• Building an Effective C&E Program
• Questions/Comments
Importance of a C&E Program
Where Is the Pressure Coming From?
Law
Enforcement
Regulators
Rating
Agencies
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Enforcement Agencies
NGOsInstitutional
InvestorsCustomers
&
Partners
Importance of a C&E Program, cont.
Why Do Compliance and Ethics Failures Pose a Big Risk?
7
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NikoNikoNikoNiko Resources: Ottawa’s Resources: Ottawa’s Resources: Ottawa’s Resources: Ottawa’s
corruption test case corruption test case corruption test case corruption test case
SNC coSNC coSNC coSNC co----operating with RCMP operating with RCMP operating with RCMP operating with RCMP
investigation investigation investigation investigation
Canadian accused of bribing cabinet minister in India is a Canadian accused of bribing cabinet minister in India is a Canadian accused of bribing cabinet minister in India is a Canadian accused of bribing cabinet minister in India is a
test case for Canada’s foreign antitest case for Canada’s foreign antitest case for Canada’s foreign antitest case for Canada’s foreign anti----corruption law corruption law corruption law corruption law
Importance of a C&E Program – Costs of an Ethics Failure
Type 2:Investigative
Administrative
and audit Legal
Type 3:Loss of company reputation
Morale loss
DOJ/
regulator
Diminished
performance
Type 1:Fines and penalties
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Corrective actions
Remedial
education Government
oversightEmployee
cynicism
regulator
scrutiny
Increased regulation
Fines and penalties
Loss of business
Agenda
• Introductions
• Importance of a C&E Program
• Global Trends & Concerns
• Components of a C&E Program
9
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• Components of a C&E Program
• Building an Effective C&E Program
• Questions/Comments
Global Trends & Concerns
• Bribery and Corruption
– Increased focus worldwide on bribery and corruption
• Canada Corruption of Foreign Public Officials Act
• UK Bribery Act
• Foreign Corrupt Practices Act (FCPA)
• OECD Good Practice Guidance
– Enforcement activity continues to increase and costs for violations are
enormous
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Source: Gibson Dunn, 2011 Year-End FCPA
Update (January 3, 2012 )
Global Trends & Concerns, cont.
• Whistleblowing and Reporting (US)
– U.S. Dodd-Frank Act
• Data Protection and Data Privacy (EU & NA)
– PIPEDA & Canadian Provincial Laws
– EU Data Privacy Directive
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– EU Data Privacy Directive
– U.S. State Laws
• Securities Fraud and Insider Trading (US)
– “Expert Networks”
• Protection of Corporate Assets (Mexico)
– Intellectual Property
Global Trends & Concerns, cont. Increased Risk Beyond Corporate Boundaries
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Risk Exposure
Corporation
Joint Ventures
Agents/Partners
Suppliers
Customers
Agenda
• Introductions
• Importance of a C&E Program
• Global Trends & Concerns
• Components of a C&E Program
13
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• Components of a C&E Program
• Building an Effective C&E Program
• Questions/Comments
Components of a C&E Program, cont.
What Are the Key Elements of a C&E Program?
2
1
6
5Standards & Procedures
Tone at the Top & Tone from the Middle
Monitoring, Auditing & Reporting
Incentives & Discipline
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3
4
2
7
8
6Tone at the Top & Tone from the Middle
Appropriate Program Structure
Education & Communication
Incentives & Discipline
Response & Prevention
Risk Assessment
What are the 3 items most critical to your compliance & ethics program’s success?
93
46 46 4350
75
100
There is clear unanimity and differentiation among the choices
Percent (%
)Components of a C&E Program, cont.
15
43
17 15 12 14 110
25Percent (%
)
Source: 2011 SAI Global Client Benchmarking Survey
Components of a C&E Program, cont.
BIG PICTURE = has your organization established compliance standards and procedures that are designed to
prevent and detect unethical and/or criminal conduct?
Standards & Procedures
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Assess:
√ Breadth, depth, and usability
√ In relation to your industry, size, complexity,
and business functions
Policies are updated frequently and are a time-consuming part of the job - but controls may be
lacking
How do you communicate and manage policies?(% of respondents)
Annually44%
Every 2 yrs22%
Every 3 yrs11%
Not routinely23%
Review and/or Update Policies
Components of a C&E Program, cont. 17
Distribute
Confirm understanding
Monitor compliance
Review
Update
vs. what will regulators expect?
99%
63%
25%11%
Posted on the intranet
Communicated via email
Distributed via a learning
management system
Tracked via a learning
management system
(% of respondents)
Source: 2011 SAI Global Client Benchmarking Survey
Components of a C&E Program, cont.
Tone at the Top & Tone from the Middle
BIG PICTURE = Does your company’s senior and middle management “talk the talk” and “walk the walk?” Do managers
demonstrate support of the program?
18
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Assess:
√ Substance, visibility & sincerity
√ Program driven by local leaders
√ Management responsibility for employee participation in
program
Components of a C&E Program, cont.
Appropriate Program Structure
BIG PICTURE = is your Board of Directors knowledgeable about, and does it oversee, your company’s C&E program? Is
a member of high-level personnel charged with overall
responsibility for your company’s C&E program?
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Assess:
√ Visibility and oversight of program at the highest levels of the organization
√ Structure of, and resources available to, C&E department
√ Compliance Committee(s) including other business unit leaders (e.g., HR,
Legal, Audit)
Components of a C&E Program, cont.
Education & Communication
BIG PICTURE = does your company require appropriate C&E education, and does it communicate, at all levels?
Assess:
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Assess:
√ Annual, proactive plan
√ Broad audience
√ Appropriateness to individuals’ roles and
responsibilities
√ Frequency and updates
√ Records of participation
Components of a C&E Program, cont.
Every 2 yrs2%
AnnuallyIt's
Frequency of C&E training
Every 3 yrs6%
Every 2 yrs26%
With updates11%
Other 7%
Frequency of Code online training
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Annually30%
Twice a yr5%
Quarterly16%
It's ongoing47%
26%
Annually50%
Source: 2011 SAI Global Client Benchmarking Survey
3-7,000 (24%) 7-15,000 (16%)
15-50,000 (20%)
>50,000 (13%)
Size of Business vs. Time Spent on Training/Employee
$1 - 5 B
$5 - 12 B
$12 - 25 B
> $25 B
<1 hr
1 - 2 hrs
2 - 4 hrs
Time spent by each
employee on C&E training
Global Revenue (USD)
22
0 10 20 30
< $500 M
$500 M - 1 B
2 - 4 hrs
> 4 hrs
% of all respondents
12% 29% 36% 23%
0 25 50 75 100
TOTAL
Almost 60% of clients train > 2 hrs/year/employee
Source: 2011 SAI Global Client Benchmarking Survey
Components of a C&E Program, cont.
Monitoring, Auditing & Reporting
BIG PICTURE = has your company implemented and publicized a reporting system designed to detect unethical and/or criminal
conduct?
Assess:
√
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√ Anti-retaliation measures
√ Anonymity &confidentiality
√ Communication of limitations
√ Publicize & market
√ Periodic evaluation of program effectiveness
Components of a C&E Program, cont.
Incentives & Discipline
BIG PICTURE = does your organization enforce its C&E standards by using appropriate incentives and
disciplinary measures?
Assess:
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Assess:
√ On a case-by-case basis
√ Enforcement & reinforcement consistently & at all levels
√ Integrate C&E factors into leadership development,
employee evaluations &
promotions, rewards &
recognition
Components of a C&E Program, cont.
Response & Prevention
BIG PICTURE = does your company respond in a reasonable and appropriate manner to instances of unethical and/or
criminal conduct?
25
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Assess:
√ Responses designed to prevent further, similar
criminal conduct
√ Modification of program, if necessary
Components of a C&E Program, cont.
Risk Assessment
BIG PICTURE = does your organization periodically assess its risk of unethical and/or criminal conduct?
Assess:
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Assess:
√ Design, implementation, or modification of program to
address identified risks
√ Periodic risk prioritization
√ Dynamic process involving self-review & evaluation
Tools used in risk assessment process
0102030405060
% of respondents
Components of a C&E Program, cont.
27
0
Source: 2011 SAI Global Client Benchmarking Survey
Risk Assessment Frequency
0%
20%
Components of a C&E Program, cont.
28
20%
40%
60%
80%
100%
Annually
Every 2 yrs
Every 3 yrs
Never
Not routinely
Most frequently assessed areas are: bribery & corruption; ethics &
corporate culture; financial integrity; gifts & conflicts of interest;
and health, safety & environmental protectionSource: 2011 SAI Global Client Benchmarking Survey
Agenda
• Introductions
• Importance of a C&E Program
• Global Trends & Concerns
• Components of a C&E Program
29
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• Components of a C&E Program
• Building an Effective C&E Program
• Questions/Comments
Building an Effective C&E Program
30
• Set clear, long-term program goals
• Make critical program requirements mandatory
– Follow through on requirements
• Brand and market the program
Practical advice for program success:
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• Brand and market the program
• Treat C&E education as both a cultural initiative and
professional development, rather than as “training”
• Continually assess risk and employee attitudes using
multiple vehicles
• Utilize shorter, more frequent compliance periods to
maintain a continuous level of awareness
Building an Effective C&E Program, cont.
31
• Utilize multiple communication vehicles to keep level
of awareness high (courses, communication tools,
marketing events, posters, newsletters, company
meetings, etc.)
Practical advice for program success:
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meetings, etc.)
• Solicit feedback on program
• Celebrate doing the right thing at all levels of the
organization
• Report back to employees regarding status of
program, critical decisions that have been made,
ethical health of organization, etc.
Building an Effective C&E Program, cont.
32
• Recognize that cultures, laws, practices,
etc. may vary across the company
• Utilize Code of Conduct education to help
develop a unified culture and consistent
Common globalization issues:
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develop a unified culture and consistent
values across the company
• Ensure program is relevant to each
geographic area
• Address language and technical issues
• Identify key contact(s) in each geographic
area to assist with program rollout and
management
Building an Effective C&E Program, cont.
33
Measuring program success:
Objective Measurement Examples
- C&E training statistics
- Hotline calls/issues raised (number and nature)
- Attendance and participation in company events and
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- Attendance and participation in company events and programs
- Lawsuits, administrative actions and complaints
- Instances of ethical leadership, behavior that are rewarded
- Performance evaluations
- Recruiting success
- Employee retention
Building an Effective C&E Program, cont.
34
Measuring program success:
Subjective Measurement Examples
- Management participation and sponsorship of Code, C&E Program
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- Employee exit interview data
- Feedback/suggestion, participation in vehicles/events for improving organization
- Employee surveys, focus groups & interviews
How do you determine C&E program effectiveness?
Qualitiative reporting
Assessment of organizational culture
Employee disclosures
Litigation
Random or regular audits of risks
% of Clients Who Use Each Measure
Building an Effective C&E Program, cont.
35
0 20 40 60 80 100
Training completion rates
Hotline data
Follow-on testing
Exit interview data
Case/incident mgmt data
Internal investigations data
Qualitiative reporting
>50% of clients<50% of clients
Source: 2011 SAI Global Client Benchmarking Survey
To whom do you communicate ‘effectiveness?’
50
60
70
80
We communicate to senior management
We communicate to the Board
Building an Effective C&E Program, cont.
36
0
10
20
30
40
50
We don’t communicate effectiveness
We communicate to employees
Source: 2011 SAI Global Client Benchmarking Survey
Agenda
• Introductions
• Importance of a C&E Program
• Global Trends & Concerns
• Components of a C&E Program
37
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• Components of a C&E Program
• Building an Effective C&E Program
• Questions/Comments
Questions/Comments
38
ANDREA FALCIONE, JD, CCEP
51 Sawyer RoadSuite 510Waltham
Chief Ethics Officer & VP Advisory Services
Compliance Americas
[email protected]/compliance
WalthamMA 02453
+1 781 891 9700 M+1 781 398 3524 D+1 781 891 9701 F