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Whistleblowing how to manage reputational risks - 8th webinar 16 nov 2017

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Companies need to incorporate whistleblowing procedures into their corporate culture. Whistleblowing is an instrument used to reinforce trust inside the company and to strengthen corporate culture.
It helps to safeguard and uphold tenets such as corporate integrity, anti-corruption, anti-bribery regulations and codes of ethics. It also forms a key means of addressing wrongdoing and dysfunctional behaviour.

The participants were Michel de Fabiani (Non-Executive Director Valeo/Valco/Ebtrans), Kate Kenny (Professor in Management and Organisation Studies at Queen’s University Belfast), Richard Eveleigh (AIG) and Alex Lowe, Senior Associate for Mills & Reeve LLP.
The webinar was moderated by Dr. Roger Barker, Senior Consultant, Institute of Directors, IoD, UK.

The webinar covered:
- How is whistleblowing integrated in the corporate culture? What type of education/training is needed to support the process?
- With the whistleblower phenomenon increasing, institutions have started taking measures to handle it. What are the best practices?
- The role division / allocation between internal auditors, risk managers and board members.

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Whistleblowing how to manage reputational risks - 8th webinar 16 nov 2017

  1. 1. Michel de Fabiani Vice President Franco-British Chamber of Commerce & Industry Richard Eveleigh Innovation Leader Financial Lines UK AIG Kate Kenny Professor of Management and Organisation Studies Queen’s University, Belfast Alex Lowe Senior Associate Employment Solicitor Mills & Reeve LLP
  2. 2. Kate Kenny Professor, Management and Organization Studies 16th November 2017 Integrating whistleblowing
  3. 3. Introduction • Integrating whistleblowing is currently topical but it is difficult to do Background: • Research into best practice in Speak-up systems: health, engineering, banking, government • Supported by ACCA/ ESRC, with Warwick University and Greenwich University
  4. 4. Integrating whistleblowing: Key challenges From employee’s perspective: • Fear of reprisal • Fear of being ignored
  5. 5. Integrating whistleblowing: Key challenges • Overcoming fears, building trust • Whistleblowing is first and foremost an interaction. Trust encompasses: Expectation, interpretation, suspension • Characterized by ‘insufficient information and emotionally-enabled leaps of faith’ • The dangers of non-response
  6. 6. Recommendations • Allow employee to circumvent problem area: variety of channels • Respond continually, and know the obstacles • Personalize responsiveness
  7. 7. Recommendations • Not all channels are made equal, from employee’s point of view: Autonomy is key • Supporting systems: question channels / communicate re. non-core speak ups
  8. 8. Recommendations • Formalize role and process for managers • Participate in development of standards, for competitive advantage via use of speak up data Reports, recommendations and other resources available: www.whistleblowingimpact.org
  9. 9. What is it? o “Workers” who make “protected disclosures” are protected from suffering detriment or being dismissed at the hands of their employer o Negative obligation o Regime encourages disclose primarily to employers
  10. 10. How did the regime develop? o Major tragedies in 1980s and 1990s: – Piper Alpha – Clapham Rail Crash o Reports into these incidents showed workers knew there were problems but were reluctant to speak up o Public Interest Disclosure Act 1998
  11. 11. What is a protected disclosure? o Qualifying disclosure: – disclosure of information – reasonable belief in relevant failure – reasonable belief disclosure in the public interest o Protected disclosure: – made through the appropriate channels to the right person
  12. 12. Scope of protection o Compensation for unfair dismissal or detriment o No financial cap on compensation o No qualifying period of service o Potential for abuse?
  13. 13. Whistle-blowing: implications for executives and insurers 16th November 2017 Richard Eveleigh Innovation Leader, Financial Lines UK, AIG +44 (0) 7954 7189 richard.eveleigh@aig.com FPO
  14. 14. Good thing because … Bad thing because … Whistle-blowing: implications for executives and insurers
  15. 15. Directly relevant insurance Directors and Officers Liability: Protects Ds, Os and sometimes employees. Investigations, civil claims, prosecutions: costs, liabilities, maybe regulatory fines, not criminal fines Employment Practices Liability: Protects companies and their Ds, Os and employees. Employment matters raised via WB. Claims for retaliation against WB.
  16. 16. Indirectly relevant insurance All other types of insurance which cover companies for losses or liabilities which WB could prevent. Public liability, employers’ liability, products liability, professional liability, crime, buildings and other property, cyber and data disclosure liability. Eg, blowing whistle on: - health and safety malpractice could prevent accident and ensuing liability; - security bad practice (for data or crime).
  17. 17. Value for executive and insurer of good WB procedures Prevent or reduce company loss, expense, civil liability, criminal liability reputation damage. Eg: internal theft or fraud - bribery - health and safety - data protection lapses - accounting frauds - regulatory breaches - workplace bullying. Imagine if early WB on emissions tricks at VW. Self-reporting: punishment reduction and “first past the post” reprieves. Innocent executive – but risk of misfeasance or negligence or regulatory liability for failure to prevent.
  18. 18. Companies’ prevention duties Bribery Act 2010 s 7 – company offence of failing to prevent bribery. Criminal Finances Act 2017 ss 45 and 46 – company offence of failing to prevent tax evasion facilitation. Defence: having “adequate” (BA10) or “reasonable” (CFA17) prevention procedures. Statutory government guidance talks about having good WB procedures. Modern Slavery Act 2015 - government guidance suggests WB procedures as part of modern slavery policy.
  19. 19. Buying insurance (1): insurers like good WB D&O and EPL: looking at corporate governance structure includes WB and independence of the process. For public companies - filings or website. Bribery-risk industries and territories. Confidentiality controls and anti-retaliation protections for EPL cover.
  20. 20. Buying insurance (2): disclosure of material matters UK Insurance Act 2015: “reasonable search”. Foreign equivalents. Consult WB manager as part of disclosure requirements? Disclose material matters. Risks to put right (and possibly disclose), eg: - unfenced machine (employers’ liability) - manufacturing process defect (product liability) - security failings (crime or premises). Executive liability for invalidity of insurance.
  21. 21. Whistle-blowing during insurance cover Reporting insured event. Reporting matter [likely to] [which may] give rise to a claim: does your policy say “must report” or “may report”? Discipline of communication between WB managers/compliance and risk managers, insurance purchasers and brokers.
  22. 22. THE EUROPEAN CONFEDERATION OF DIRECTORS ASSOCIATIONS - AVENUE DES ARTS 41 - BRUSSELS 1040 Joint webinar with ecoDa/AIG and FERMA 2 Days of Professional Development for European Directors Whistleblowing: how to manage reputational risks? EVOLUTION OF WHISTLEBLOWING Michel de Fabiani Vice-President Franco-British Chamber of Commerce & Industry 16 November 2017
  23. 23. THE EUROPEAN CONFEDERATION OF DIRECTORS ASSOCIATIONS - AVENUE DES ARTS 41 - BRUSSELS 1040 Joint webinar with ecoDa/AIG and FERMA 2 Days of Professional Development for European Directors Whistleblowing: how to manage reputational risks? FROM NUMBERS TO BEHAVIOURS  From a financial to a generalised scope  From accounting to compliance issues  From small robbery/corruption cases to large fraud / corruption/non ethical issues
  24. 24. THE EUROPEAN CONFEDERATION OF DIRECTORS ASSOCIATIONS - AVENUE DES ARTS 41 - BRUSSELS 1040 Joint webinar with ecoDa/AIG and FERMA 2 Days of Professional Development for European Directors Whistleblowing: how to manage reputational risks? FROM LIGHT PROCESSES TO OPEN PROGRAMMES  From CFO to CEO  From the Corporation to the Society  From the Exco to the Board  From hidden to open  From correction to sanction
  25. 25. Any Questions? Please use the GoTo Webinar Dashboard to send a question to the Moderator

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