One mechanism to uncover critical non-compliances in your organisations: Whistle-blowing !!! Some interesting reading follows...Non compliances can lead to major reputational damage to any company's sustainability, impacting its shareholders and its employees. There will be investigations by authorities and disruptions to business. Then there will surely be penalties from regulators which could cripple the company. Even with good corporate governance in place, the risks remain if there is no effective whistle-blowing mechanism in place.
It just takes one person who knows of a major non compliance to say something. Even with the collusion and discretion that accompanies a fraud, somehow someone will witness it. And they need to have an option to report the matter with the required anonymity in case they fear victimization.
Here are some common concerns around the whistle-blowing tool:
How many false reports needs to be entertained? Why should petty issues be investigated? Should financial impact filtering be followed?
Some points of view (but not limited to): Not only will there always be unsubstantiated allegations, there will be many minor finger pointing complaints which should have been solved with a short talk between the parties involved. Therefore something is missing, for example, better dialogue between manager and employee at the first time the root causes takes place. So there is a solution to implement. One could even estimate that for every 10 minor complaints there will be one of greater interest. And possibly after 100 complaints, the one significant one may be uncovered which has a high impact on the company. What is the ratio in your organisation? There is also no science as to which complaint to investigate and which not to. It's a judgement that needs to be made and defended by the responsible governors of risk management.
There are for sure other concerns. However here is just a few more to note:
Why does no one use the Hotline and the anonymous reporting options provided? Why did the company leadership not know this major non compliance was taking place?
Some points of view (but not limited to): To technically have a Hotline as a tickmark is not enough. It should be promoted actively. Posters should be placed in key locations where employees congregate. Links should be visible on company internal websites. The whistle-blowing tool should form part of basic Code of Ethics training. Management should encourage its use as a final option should a person have no other alternative. Investigation outcomes may require consequences. And finally the tone needs to be set by the top leader of the organization that critical non-compliances should always be reported and victimization will not be tolerated for those reporting in good faith.
Whistle-blowing can infact serve as a good corporate governance tool to uncover critical issues in an organisation. It would require great investment from all to make it a sustainable success to mitigate compliance risks.
<written by Dipesh Narsai>
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