In a recent virtual session at the ACFE Fraud Conference Asia-Pacific, Rupert Evill sought to dispel the stigma and disdain surrounding ethics and compliance departments by teasing out the reasons for this stigma and providing attendees with insider tips to make compliance and ethics trainings memorable and effective. As the founder of EthicsInsight, Evill described his work by saying, “EthicsInsight is trying to simplify the way risk is assessed and benchmarked from a controls perspective so then you can really focus on managing the cultural change aspect.” He highlighted his company’s focus on working with everyone involved in the supply chain to make this risk assessment information widely accessible in order to truly spark change in business culture.
To begin his presentation, Evill crowdsourced answers to the most common excuses attendees have heard for why people commit ethics infractions ranging from money laundering and corruption to harassment and extortion. Evill was able to pare these answers down into four types of responses:
Historical: “That’s the way things have always been done around here.”
Behavioral: “Other people are doing it,” or “It’s a market practice.”
Ethical offsetting: “I did this, but it was for the greater good.”
Pressure: time pressure, financial pressure to hit targets or pressure from bosses; “I asked my manager and he approved it.”
He then asked for any descriptors people had heard about ethics and compliance departments. Examples included “internal police,” “the department of no,” “red tape,” and “steamrollers sent to destroy the business.” Evill used these examples to underscore the importance of implementing enjoyable and informative training sessions as a means of shifting popular opinion about the role of ethics and compliance.
Evill’s first tip for working with a company to assist in their risk assessment when considering doing business with a third party seems rather simple, but can be extremely helpful and time-saving if done from the outset. Evill suggests having the client list answers to the following questions:
Who are you dealing with?
What would a potential issue look like?
How would that issue come to be?
What would the likelihood of the occurrence of a risk be?
What would the impact be?
Having people answer these questions, Evill explained, gets through a major part of an external risk assessment. This method is also crucial if you are strapped for resources or limited by an inability to travel to meet a client to consult in person.
Evill next wanted to address what people can do to make ethics and compliance seem attractive to colleagues. One of Evill’s reasons for highlighting this aspect of his talk was that, nowadays, though companies are still concerned about violating regulatory practices, a major source of anxiety has become the court of public opinion. Companies that are tied to their brand identity and public image have become increasingly nervous about bad press regarding human rights violations or modern slave labor that would cause a major hit in revenue. All of these anxieties should motivate an interest in third-party risk assessments, so that companies are actively conscious about their reputations from a compliance standpoint.
Some factors to keep in mind when attempting to make ethics and compliance more attractive and effective include:
Empathy: Though people love to resent the ethics department, understanding the source of this resentment is important and useful.
Comprehension: An ability to use empathy in order to comprehend this resentment will allow you to cater guidance and trainings to be most effective.
Tools: People need resources to educate themselves in compliance. This can take the form of cheat sheets, practice tests and benchmark exercises.
In addition to these tricks, Evill reminded conference attendees not to get myopic when performing risk assessments. “What we’ve found is risks love company,” he said. “If a company calls you in for an anti-bribery and corruption assessment, you’ll likely find more examples [of fraud],” he continued. He provided the example of a company that was investigated for harassment complaints, and, after digging deeper, he found there was a significant amount of fraud occurring there as well. He summarized his lessons learned from this experience as such: “If you have a culture that tolerates discrimination and harassment, those at the top are going to feel emboldened to do other bad financial things, and those at the bottom of the organization who are getting bullied, discriminated, harassed, are not going to feel a whole world of loyalty to your organization and therefore might be more encouraged to do the more petty fraud behavior. So consider all the data you can and look at it broadly. The risks often go together. That was an extreme example, but a more common example is conflicts of interest, corruption, money laundering, all operating at the same time. They go together, so don’t look at them in isolation.”
When constructing training sessions, Evill encouraged attendees to adapt these education programs for the local markets. Understanding the context in which you’re working also entails distilling complex documents, such as government-issued documents on compliance law, and parsing these out into a few key points that people can digest quickly and easily. Evill also highlighted the benefits of using stories and examples within facilitations as a means of getting away from legal definitions and helping people remember important concepts. These trainings should also integrate third parties that you’re consistently reliant upon, so that everyone within the supply chain has access to the same skills. Also, ethics and compliance departments should be sure to follow up on trainings. Follow-up sessions help to improve the chances that participants will remember what was taught in a session and will allow for a chance to address anything that hasn’t been retained from previous trainings. Following up also serves as an opportunity to build institutional memory so that employees can share stories of success and failure, allowing colleagues to learn from these histories. In addition, benchmarking against best practices, as well as against a company’s former self, can be a powerful example to show how ethics and compliance can improve company culture.