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Managing risk from top to bottom by @ericpesik
The document discusses risk management and compliance strategies to prevent corporate misconduct, emphasizing the roles of executives and HR in creating ethical corporate cultures. It highlights data indicating that a significant portion of corporate fraud is committed by senior executives, alongside the negative impact of bribery on financial performance. Various methods for risk mitigation at multiple organizational levels are described, providing a framework for effective compliance enforcement and ethical governance.
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Managing risk from top to bottom by @ericpesik
- 1. Managing Risk fromthe Top to Bottom Arrows designed by André Luiz Gollo from the Noun Project http://thenounproject.com/term/arrows/32495/
- 2. How to SafeguardAgainst Misconduct From C-Suite Level to Regular Employees – and Using HR as a Gatekeeper
- 3. Presented at AmericanConference Institute’s 3rd Asia Pacific Summit on Anti-Corruption, Compliance and Risk Management December 03-04, 2014, Hilton Singapore
- 4. Eric Pesik AssociateGeneral Counsel and Compliance Officer Seagate Technology International Bradley Klein Partner Skadden, Arps, Slate, Meagher & Flom Thiru Sethuraman Director, Ethics and Compliance Cummins Distribution Business
- 5. Defining Your LegalUniverse Telescope designed by Claudiu Sergiu Danaila from the Noun Project http://thenounproject.com/term/telescope/9777/
- 6. Legal Universe •Local vs Home Jurisdiction • Collateral Laws and Related Issues • Territorial vs Personal Jurisdiction Judge by Luis http://thenoun Pprraodjeoc ftr.coomm T/theer mN/ojuudng Per/o3j9ec5t3 /
- 7. Risk Mitigation ActionsFrom the Top Hierarchy designed by Murali Krishna from the Noun Project http://thenounproject.com/term/hierarchy/31709/
- 8. 86% of corporatefraud is known or perpetrated by senor executives Data: Corporate Executive Board, 2006 86%
- 9. If you wantedto design an incubator for generating misconduct, it would look a lot like the C-Suite Quote: RAND Symposium Culture, Compliance and the C-Suite Image:: Team designed by Wilson Joseph from the Noun Project http://thenounproject.com/term/team/35432/
- 10. Median Loss (USD)to Fraud by Position of Perpetrator $130,000 $75,000 $500,000 Executive/Owner Manager Employee Data: 2014 Report to the Nations on Occupational Fraud and Abuse. Copyright 2014 by the Association of Certified Fraud Examiners, Inc.
- 11. CEOs are proneto viewing the company’s success as indistinguishable from their own. Quote: Scott Killingswroth, Partner Bryan Cave LLP “C” is for Crucible Superhero designed by Juan Pablo Bravo from the Noun Project http://thenounproject.com/term/superhero/23556/
- 12. Year -3 Year-2 Year -1 Year 0 Year +1 Year +2 Year +3 0.00% -0.50% -0.10% -0.20% -0.40% -1.20% -0.60% Net Profit Margin Companies that bribe have poorer net profit margin (net income divided by sales revenue) Data: Cheung, Stephen Yan-Leung, Rau, Raghavendra and Stouraitis, Aris, How Much do Firms Pay as Bribes and What Benefits do They Get? Evidence from Corruption Cases Worldwide (March 30, 2012)
- 13. Year -3 Year-2 Year -1 Year 0 Year +1 Year +2 Year +3 2.70% 5.10% 3.20% 0.90% 2.30% 1.40% Sales Growth Companies that bribe have greater sales growth compared to control firms Data: Cheung, Stephen Yan-Leung, Rau, Raghavendra and Stouraitis, Aris, How Much do Firms Pay as Bribes and What Benefits do They Get? Evidence from Corruption Cases Worldwide (March 30, 2012)
- 14. Year -3 Year-2 Year -1 Year 0 Year +1 Year +2 Year +3 -2.90% 0.50% 1.50% 1.60% 0.30% -4.60% -6.80% Cumulative Abnormal Returns Companies that bribe have poorer cumulative abnormal returns (difference between the sum of the monthly returns for bribing firms versus control firms) Data: Cheung, Stephen Yan-Leung, Rau, Raghavendra and Stouraitis, Aris, How Much do Firms Pay as Bribes and What Benefits do They Get? Evidence from Corruption Cases Worldwide (March 30, 2012)
- 15. From the Top • Tone From the Top • Risk Management Oversight • Establishing Internal Controls • Guiding Middle Management
- 16. Risk Mitigation ActionsFrom the Middle Image:: Group designed by Tonielle Krisansk, public domain http://thenounproject.com/term/group/7771/
- 17. From the Middle • Tone From the Middle • Anticipate and Recognize Ethical Dilemmas • Communicate Ethical Values • Report to Top
- 18. Risk Mitigation ActionsAt the Frontline Worker designed by Kris Khoury from the Noun Project http://thenounproject.com/term/worker/2156/
- 19. Occupational Fraud Frequency by Position of Perpetrator 42.0% 18.6% 26.2% Executive/Owner Manager Employee Data: 2014 Report to the Nations on Occupational Fraud and Abuse. Copyright 2014 by the Association of Certified Fraud Examiners, Inc.
- 20. Fraud Triangle Pressure Donald R. Cressey, Other People's Money (Montclair: Patterson Smith, 1973) Image:: Deep-Web Designed by Matt Brooks, Public Domain, http://thenounproject.com/term/deep-web/62765/
- 21. Top Behavioral RedFlags Divorce/ Family Problems “Wheeler-Dealer” Attitude Living Beyond Means Financial Difficulties Control Issues, Unwillingness to Share Duties Unusually Close Association with Vendor/Customer Employee “Wheeler-Dealer” Attitude Control Issues, Unwillingness to Share Duties Executive Manager Data: 2014 Report to the Nations on Occupational Fraud and Abuse. Copyright 2014 by the Association of Certified Fraud Examiners, Inc.
- 22. When the bigpeople get in trouble, the little people get ethics training. Quote: RAND Symposium Culture, Compliance and the C-Suite Image:: Education designed by Chris Matthews http://thenounproject.com/term/education/3012/
- 23. At the Frontline • Implement Tone From the Top and Middle • Anticipate and Recognize Ethical Dilemmas • Internalize Ethical Values • Whistleblower Hotlines
- 24. Gatekeeper: Human Resources Office designed by Luis Prado from the Noun Project http://thenounproject.com/term/office/26565/
- 25. Human Resources •New Hires • Align Performance and Compensation • Structural Alignment • HR Policies • Training • Communication
- 26. Case Study JPMorgan Friend designed by Megan Sheehan from the Noun Project http://thenounproject.com/term/friend/6808/
- 27. Case Study: GlaxoSmithKline Pill designed by Diego Naive from the Noun Project http://thenounproject.com/term/pill/16599/
- 28. Key Areas ofFocus for Compliance Zoom-In designed by Garrett Knoll from the Noun Project http://thenounproject.com/term/zoom-in/28614/
- 29. Focus for Compliance • Policies • Education • Enforcement • Remediation Diversity designed by Luis Prado from the Noun Project http://thenounproject.com/term/diversity/52927
- 30. Risk Management Model(ISO 31000, modified) 1. Mandate and Commitment 4. Communicate and Consult 2. Risk Assessment Risk Identification Risk Analysis Risk Evaluation 6. Tools and Resources 5. Monitor and Review 3. Risk Treatment
- 31. Issues and ControlPoints Hand designed by Luis Prado from the Noun Project http://thenounproject.com/term/hand/30823/
- 32. Issues and ControlPoints • Using Third Parties • Expense Reimbursement • Events and Hospitality • Other Key Areas
- 33. Questions? Hand designedby Luis Prado from the Noun Project http://thenounproject.com/term/hand/30823/
- 34. Please like and share! View other presentations: http://www.slideshare.net/ericpesik/presentations Like designed by Marwa Boukarim from the Noun Project http://thenounproject.com/term/like/1297/
- 35. Additional Resources •Ethics Resource Center www.ethics.org • International Business Ethics Institute www.business-ethics.org • Ethics Web Resources http://www.ethicsweb.ca/esources/index.html • ISO 31000 standard http://www.iso.org/iso/home/standards/iso31000.htm • Association of Certified Fraud Examiners http://www.acfe.com/ • RAND Corporation: Culture, Compliance, and the C-Suite http://www.rand.org/pubs/conf_proceedings/CF316.html • How Much do Firms Pay as Bribes and What Benefits do They Get? Evidence from Corruption Cases Worldwide http://ssrn.com/abstract=1772246 • Bribes and Firm Value - Evidence from Anti-Bribery Regulation http://ssrn.com/abstract=2179437