Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Managing risk from top to bottom by @ericpesik

1,170 views

Published on

Managing Risk from the Top to Bottom: How to Safeguard Against Misconduct from C-Suite Level to Regular Employees – and Using HR as a Gatekeeper. Presented at American Conference Institute’s 3rd Asia Pacific Summit on Anti-Corruption, Compliance and Risk Management December 3, 2014, at the Hilton Singapore

Published in: Law
  • Hello! Get Your Professional Job-Winning Resume Here - Check our website! https://vk.cc/818RFv
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here

Managing risk from top to bottom by @ericpesik

  1. 1. Managing Risk from the Top to Bottom Arrows designed by André Luiz Gollo from the Noun Project http://thenounproject.com/term/arrows/32495/
  2. 2. How to Safeguard Against Misconduct From C-Suite Level to Regular Employees – and Using HR as a Gatekeeper
  3. 3. Presented at American Conference Institute’s 3rd Asia Pacific Summit on Anti-Corruption, Compliance and Risk Management December 03-04, 2014, Hilton Singapore
  4. 4. Eric Pesik Associate General Counsel and Compliance Officer Seagate Technology International Bradley Klein Partner Skadden, Arps, Slate, Meagher & Flom Thiru Sethuraman Director, Ethics and Compliance Cummins Distribution Business
  5. 5. Defining Your Legal Universe Telescope designed by Claudiu Sergiu Danaila from the Noun Project http://thenounproject.com/term/telescope/9777/
  6. 6. Legal Universe • Local vs Home Jurisdiction • Collateral Laws and Related Issues • Territorial vs Personal Jurisdiction Judge by Luis http://thenoun Pprraodjeoc ftr.coomm T/theer mN/ojuudng Per/o3j9ec5t3 /
  7. 7. Risk Mitigation Actions From the Top Hierarchy designed by Murali Krishna from the Noun Project http://thenounproject.com/term/hierarchy/31709/
  8. 8. 86% of corporate fraud is known or perpetrated by senor executives Data: Corporate Executive Board, 2006 86%
  9. 9. If you wanted to design an incubator for generating misconduct, it would look a lot like the C-Suite Quote: RAND Symposium Culture, Compliance and the C-Suite Image:: Team designed by Wilson Joseph from the Noun Project http://thenounproject.com/term/team/35432/
  10. 10. Median Loss (USD) to Fraud by Position of Perpetrator $130,000 $75,000 $500,000 Executive/Owner Manager Employee Data: 2014 Report to the Nations on Occupational Fraud and Abuse. Copyright 2014 by the Association of Certified Fraud Examiners, Inc.
  11. 11. CEOs are prone to viewing the company’s success as indistinguishable from their own. Quote: Scott Killingswroth, Partner Bryan Cave LLP “C” is for Crucible Superhero designed by Juan Pablo Bravo from the Noun Project http://thenounproject.com/term/superhero/23556/
  12. 12. Year -3 Year -2 Year -1 Year 0 Year +1 Year +2 Year +3 0.00% -0.50% -0.10% -0.20% -0.40% -1.20% -0.60% Net Profit Margin Companies that bribe have poorer net profit margin (net income divided by sales revenue) Data: Cheung, Stephen Yan-Leung, Rau, Raghavendra and Stouraitis, Aris, How Much do Firms Pay as Bribes and What Benefits do They Get? Evidence from Corruption Cases Worldwide (March 30, 2012)
  13. 13. Year -3 Year -2 Year -1 Year 0 Year +1 Year +2 Year +3 2.70% 5.10% 3.20% 0.90% 2.30% 1.40% Sales Growth Companies that bribe have greater sales growth compared to control firms Data: Cheung, Stephen Yan-Leung, Rau, Raghavendra and Stouraitis, Aris, How Much do Firms Pay as Bribes and What Benefits do They Get? Evidence from Corruption Cases Worldwide (March 30, 2012)
  14. 14. Year -3 Year -2 Year -1 Year 0 Year +1 Year +2 Year +3 -2.90% 0.50% 1.50% 1.60% 0.30% -4.60% -6.80% Cumulative Abnormal Returns Companies that bribe have poorer cumulative abnormal returns (difference between the sum of the monthly returns for bribing firms versus control firms) Data: Cheung, Stephen Yan-Leung, Rau, Raghavendra and Stouraitis, Aris, How Much do Firms Pay as Bribes and What Benefits do They Get? Evidence from Corruption Cases Worldwide (March 30, 2012)
  15. 15. From the Top • Tone From the Top • Risk Management Oversight • Establishing Internal Controls • Guiding Middle Management
  16. 16. Risk Mitigation Actions From the Middle Image:: Group designed by Tonielle Krisansk, public domain http://thenounproject.com/term/group/7771/
  17. 17. From the Middle • Tone From the Middle • Anticipate and Recognize Ethical Dilemmas • Communicate Ethical Values • Report to Top
  18. 18. Risk Mitigation Actions At the Frontline Worker designed by Kris Khoury from the Noun Project http://thenounproject.com/term/worker/2156/
  19. 19. Occupational Fraud Frequency by Position of Perpetrator 42.0% 18.6% 26.2% Executive/Owner Manager Employee Data: 2014 Report to the Nations on Occupational Fraud and Abuse. Copyright 2014 by the Association of Certified Fraud Examiners, Inc.
  20. 20. Fraud Triangle Pressure Donald R. Cressey, Other People's Money (Montclair: Patterson Smith, 1973) Image:: Deep-Web Designed by Matt Brooks, Public Domain, http://thenounproject.com/term/deep-web/62765/
  21. 21. Top Behavioral Red Flags Divorce/ Family Problems “Wheeler-Dealer” Attitude Living Beyond Means Financial Difficulties Control Issues, Unwillingness to Share Duties Unusually Close Association with Vendor/Customer Employee “Wheeler-Dealer” Attitude Control Issues, Unwillingness to Share Duties Executive Manager Data: 2014 Report to the Nations on Occupational Fraud and Abuse. Copyright 2014 by the Association of Certified Fraud Examiners, Inc.
  22. 22. When the big people get in trouble, the little people get ethics training. Quote: RAND Symposium Culture, Compliance and the C-Suite Image:: Education designed by Chris Matthews http://thenounproject.com/term/education/3012/
  23. 23. At the Frontline • Implement Tone From the Top and Middle • Anticipate and Recognize Ethical Dilemmas • Internalize Ethical Values • Whistleblower Hotlines
  24. 24. Gatekeeper: Human Resources Office designed by Luis Prado from the Noun Project http://thenounproject.com/term/office/26565/
  25. 25. Human Resources • New Hires • Align Performance and Compensation • Structural Alignment • HR Policies • Training • Communication
  26. 26. Case Study JP Morgan Friend designed by Megan Sheehan from the Noun Project http://thenounproject.com/term/friend/6808/
  27. 27. Case Study: GlaxoSmithKline Pill designed by Diego Naive from the Noun Project http://thenounproject.com/term/pill/16599/
  28. 28. Key Areas of Focus for Compliance Zoom-In designed by Garrett Knoll from the Noun Project http://thenounproject.com/term/zoom-in/28614/
  29. 29. Focus for Compliance • Policies • Education • Enforcement • Remediation Diversity designed by Luis Prado from the Noun Project http://thenounproject.com/term/diversity/52927
  30. 30. Risk Management Model (ISO 31000, modified) 1. Mandate and Commitment 4. Communicate and Consult 2. Risk Assessment Risk Identification Risk Analysis Risk Evaluation 6. Tools and Resources 5. Monitor and Review 3. Risk Treatment
  31. 31. Issues and Control Points Hand designed by Luis Prado from the Noun Project http://thenounproject.com/term/hand/30823/
  32. 32. Issues and Control Points • Using Third Parties • Expense Reimbursement • Events and Hospitality • Other Key Areas
  33. 33. Questions? Hand designed by Luis Prado from the Noun Project http://thenounproject.com/term/hand/30823/
  34. 34. Please like and share! View other presentations: http://www.slideshare.net/ericpesik/presentations Like designed by Marwa Boukarim from the Noun Project http://thenounproject.com/term/like/1297/
  35. 35. Additional Resources • Ethics Resource Center www.ethics.org • International Business Ethics Institute www.business-ethics.org • Ethics Web Resources http://www.ethicsweb.ca/esources/index.html • ISO 31000 standard http://www.iso.org/iso/home/standards/iso31000.htm • Association of Certified Fraud Examiners http://www.acfe.com/ • RAND Corporation: Culture, Compliance, and the C-Suite http://www.rand.org/pubs/conf_proceedings/CF316.html • How Much do Firms Pay as Bribes and What Benefits do They Get? Evidence from Corruption Cases Worldwide http://ssrn.com/abstract=1772246 • Bribes and Firm Value - Evidence from Anti-Bribery Regulation http://ssrn.com/abstract=2179437

×