8.4 Risk Management and Ethical Compliance Programs
3 min read•august 9, 2024
and ethical compliance are crucial for corporate governance. They help companies identify threats, ensure regulatory adherence, and promote ethical behavior. These practices safeguard assets, improve transparency, and boost stakeholder trust.
Effective programs include clear standards, oversight, training, and monitoring. They also protect whistleblowers and cultivate an . By integrating these elements, organizations can navigate risks and maintain accountability in today's complex business landscape.
Risk Management Frameworks
Understanding Risk Management and ERM
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Comparison between MONARC and different Risk Management Methods - MONARC View original
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An Alternative Risk Matrix Template: Welcome to the Matrix View original
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Risk management identifies, assesses, and prioritizes potential threats to an organization
(ERM) extends risk management across entire organization
ERM integrates risk management into strategic planning and decision-making processes
Involves developing strategies to mitigate or transfer risks (insurance policies, hedging)
Continuous process includes monitoring, reviewing, and updating risk management plans
Benefits of ERM include improved resource allocation and increased stakeholder confidence
Internal Controls and Regulatory Compliance
safeguard assets, ensure accurate financial reporting, and promote operational efficiency
Key components of internal controls include control environment, , control activities, information and communication, and monitoring
(SOX) enacted in 2002 to improve corporate governance and financial transparency
SOX requires public companies to establish internal controls over financial reporting
Mandates management to assess and report on effectiveness of internal controls annually
Independent auditors must attest to management's assessment of internal controls
Ethical Compliance Programs
Components of Effective Compliance Programs
ensure adherence to laws, regulations, and internal policies
Establish clear standards and procedures to prevent and detect misconduct
Designate high-level personnel responsible for program oversight
Conduct due diligence to prevent delegation of authority to unethical individuals
Communicate standards and procedures through training programs and publications
Monitor and audit program effectiveness, including confidential reporting mechanisms
Enforce standards through disciplinary measures and incentives
Codes of Ethics and Whistleblower Protection
Code of ethics outlines organization's core values, ethical principles, and expected behaviors
Provides guidance on handling ethical dilemmas and conflicts of interest
Regularly updated to address emerging ethical issues and changing regulatory requirements
safeguards employees who report misconduct or illegal activities