Balancing the Ethics of Risk Management
Being ethical in the world of business, risk management and compliance can be quite a challenge. It is an on-going battle for all companies regardless of which sector they run in. Arguably, legal or compliance abuses are the lesser of worries compared to establishing a culture of honesty and integrity.
Unethical behaviour, a lack of clear business conduct and standards are worrying risk factors that often go by unnoticed and companies may have to take firm action to counteract those who promote this behaviour and the risk.
There are a wide range of reasons as to why the ethics surrounding risk management, compliance and general business is difficult to establish. More often than not, there is a lack of awareness about conduct or individuals miscalculate their judgement on ethics within a business.
Rules, guidelines and standards are sometimes not clear cut enough to follow and a lack of understanding plus confusion can create an atmosphere for unethical behaviour. Similarly, a lack of leadership illustrating ethical conduct can also be misleading to employees. An unclear example of the consequences of inappropriate behaviour can leave staff displeased.
An unclear example of the consequences of inappropriate behaviour can leave staff displeased.
The issue could lie within the fact that the endurance of a company depends not only on their foundation, in other words, the management team, but also on the structure of the firm. Every level of staff should be aware of the ethics on which the business is built upon, as well as implement and value them.
A move to establish role models in each department may be a step towards upholding the company’s ethical stance. By creating lead examples for staff to follow, a risk is lessened for the company. Clear guidelines are also beneficial and developing a reward system for good and ethical behaviour will be a step in reinforcing the message. Clear repercussions for violations should also be set out to ensure that all staff are equipped with the necessary knowledge to make ethical decisions and improve risk management for the business.
Firms lead by example and an environment needs to be created in which employees are comfortable about reporting unethical conduct that they may have witnessed and feel confident that the company are ready to take action. There is constant observation on how a company runs itself not only technically but ethically and the two go hand-in-hand.
Is the disciplinary system impartial and reliable? An active move has to be made to promote an ethical culture within the business.
Whilst senior members and management receive appropriate training on risk management and compliance through their company, perhaps training would also be beneficial for ethical purposes. Feeling as if you are prepared to answer any questions or deal with any unethical behaviour is a positive act that can be reflected to all members of staff in the operation.
It is being able to address the bigger picture. Is the disciplinary system impartial and reliable? An active move has to be made to promote an ethical culture within the business. Once this is established, a business can look beyond just regulatory compliance and risk management, and can intertwine it with the newly established culture of integrity to form a strong and risk-free foundation.
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Image credit: nexusplexus / 123RF Stock Photo
Paige Hawin
Paige has over three years’ experience in risk management and regulatory compliance and has worked for several organisations. She is now working with Lombard Risk and is spending more time in the financial sector.