A company’s code of conduct is the most important communication of an ethics and compliance program, setting out the company’s values and expectations for employee behavior. It helps everyone make responsible decisions, reinforces compliance with a company’s standards and protects the company’s reputation. Your code of conduct should align with your company’s current risks. When you identify your most serious and frequent ethics and compliance risks, you can address them in your code. The world is constantly changing, raising new opportunities and new risks to your business. Companies must address emerging risks proactively, assessing and revising their corporate codes to include new topics relevant to the current business environment.

1. Emerging Risks:
Is Your Code of Conduct
Up to Standard?
Jason Lunday, IntegrityFactor

2. Jason Lunday
Jason Lunday is a consultant with IntegrityFactor, a professional
services company. With more than 25 years of experience in consulting
and management, Lunday has worked with companies of many sizes
and across numerous industries to implement and enhance overall
ethics and compliance programs and their components, including
corporate values, codes of conduct and policies, training,
communication and risk, culture and program assessments.
Much of his work has involved development, revision and review of
corporate codes of conduct, as well as in-depth research on corporate
code of conduct fundamentals, trends and leading practices.
He has authored or co-authored over thirty articles, including for
Compliance & Ethics Professional, Corporate Compliance Insights,
ethikos: A Journal of Practical Business Ethics, Ivey Business Journal,
the Federal Ethics Report and EPAC Magazine.
Jason has worked for Goldman, Sachs & Co., Arthur Andersen LLP, the
Ethics Resource Center, VeriSign, Inc., and Premier, Inc. Jason holds
an MBA, with focus in business ethics and organizational behavior,
from the University of Virginia’s Darden Graduate Business School.

3. Agenda
► Trends & drivers for emerging risks
► Emerging risks making their way into codes of conduct
► Implications of more standards
► Emerging risks and their impact on the evolving role of a code of
conduct
► How to assess which emerging risks may be relevant to your
organization and its code
© 2016 IntegrityFactor

4. Poll Question
When was your organization’s code of conduct last updated?
A.Within the last year
B.Two years ago
C.Three years ago
D.Four years ago
E.Five or more years ago
© 2016 IntegrityFactor

5. CEB Research
© 2016 IntegrityFactorSource: “Getting Code Review Right,” CEB, 2014-2016.

6. Trends & Drivers
© 2016 IntegrityFactor
Legal
►New laws
►More regulatory clarity
►Greater enforcement
Technology
►Internet
►Greater amounts of
data
►Ease of data transfer
Transparency
►Internet
►Many eyes
►Corporate reporting
Organizational
integrity
►Holistic responsibility
►Recognition of holistic
cause-and-effect
Power of
stakeholders and
interested parties
Reputation and trust
(regulatory sanctions may
be the least of concern)
Higher order
expectations
►Industry
►Professional
►Business entity
►Non-business entity (non-
profits, advocacy)
Better ways to manage
E&C risk
Interconnectedness of:
►Entities
►Stakeholders (upstream-
to-downstream effects

7. Emerging Risks: A Process Model
© 2016 IntegrityFactor
Laws & regulationsLaws & regulations
Self-Regulatory
Standards
Self-Regulatory
Standards
Company stakeholder
concerns
Company stakeholder
concerns
Advocacy group
concerns
Advocacy group
concerns
NewsNews News articles, investigative exposés
Agitation for change, protests, boycotts
Shareholder proposals,
Advocacy orgs, business orgs,
quasi-governmental orgs

8. Major Emerging Risks
► Third party management
► Human rights
► Sustainability
► Industry specific risks
► Technology-related
► Risk management
► Legal process
► Corporate structure
► Aspirational
© 2016 IntegrityFactor

9. Topic: Third Party Management
© 2016 IntegrityFactor
Overview
Emerging E&C management issue;
partly driven by regulatory guidance
Overview
Emerging E&C management issue;
partly driven by regulatory guidance
Resources
Anthem, Citigroup, Comcast, CVS, IBM
Resources
Anthem, Citigroup, Comcast, CVS, IBM
Topics
►Employees’ duties in working with
third parties (arm’s length, objective
procurement, proper procedures,
avoidance of COI, nepotism, safety,
environmental protection, use of
supplier data, G&E and free services
►Controls for working with third parties
(contracts, gov’t. acquisition regs,
monitoring,
►Supplier diversity, incl. SME
►Separate third party codes of conduct
or policies/supplier duties
(performance standards, confidentiality,
G&E)
Topics
►Employees’ duties in working with
third parties (arm’s length, objective
procurement, proper procedures,
avoidance of COI, nepotism, safety,
environmental protection, use of
supplier data, G&E and free services
►Controls for working with third parties
(contracts, gov’t. acquisition regs,
monitoring,
►Supplier diversity, incl. SME
►Separate third party codes of conduct
or policies/supplier duties
(performance standards, confidentiality,
G&E)
OverviewOverview
ResourcesResources
Sub-TopicsSub-Topics

10. Topic: Human Rights
© 2016 IntegrityFactor
Overview
►Closely linked to supplier/supply
chain conduct
►High-level standards, sometimes
dispersed among categories; more
content in corporate statements or
policies
Overview
►Closely linked to supplier/supply
chain conduct
►High-level standards, sometimes
dispersed among categories; more
content in corporate statements or
policies
Resources
Chevron, Clorox, Dow, Applied
Materials, Citigroup
Resources
Chevron, Clorox, Dow, Applied
Materials, Citigroup
Topics
►Environmental protection; improving
env. performance in operations
►Reduction of waste, emissions,
energy consumption; op. footprint
►Resource conservation/efficient
operations; recycling, incl. product
development
►Sustainable development/growth
►Community health & safety;
►Supplier diversity; use of local
suppliers
►Use of third parties with similar
standards
►Public reporting (“triple bottom line”)
Topics
►Environmental protection; improving
env. performance in operations
►Reduction of waste, emissions,
energy consumption; op. footprint
►Resource conservation/efficient
operations; recycling, incl. product
development
►Sustainable development/growth
►Community health & safety;
►Supplier diversity; use of local
suppliers
►Use of third parties with similar
standards
►Public reporting (“triple bottom line”)
OverviewOverview
ResourcesResources
Sub-TopicsSub-Topics

11. Topic: Sustainability
© 2016 IntegrityFactor
Overview
Can be a broad topic, but often
focused on environmental protection
Overview
Can be a broad topic, but often
focused on environmental protection
Resources
Corporate statements on
environmental protection and
sustainability; Domtar, Dow, Avery
Dennison, Celanese, Kellogg
Resources
Corporate statements on
environmental protection and
sustainability; Domtar, Dow, Avery
Dennison, Celanese, Kellogg
Topics
►Environmental protection; improving
env. performance in operations
►Reduction of waste, emissions, energy
consumption; op. footprint
►Resource conservation/efficient
operations; recycling, incl. product
development
►Sustainable development/growth
►Community health & safety;
►Supplier diversity; use of local suppliers
►Use of third parties with similar
standards
►Public reporting (e.g., “triple bottom
line”)
Topics
►Environmental protection; improving
env. performance in operations
►Reduction of waste, emissions, energy
consumption; op. footprint
►Resource conservation/efficient
operations; recycling, incl. product
development
►Sustainable development/growth
►Community health & safety;
►Supplier diversity; use of local suppliers
►Use of third parties with similar
standards
►Public reporting (e.g., “triple bottom
line”)
OverviewOverview
ResourcesResources
Sub-TopicsSub-Topics

12. Topic: Sustainability (II)
© 2016 IntegrityFactor

13. Topic: Industry-Specific Risks
© 2016 IntegrityFactor
Overview
►Increased inclusion of standards
specific to industry rules and
expectations; more industry-specific
self-regulation
►Moving from policies into the code;
signal of integrated compliance
management
Overview
►Increased inclusion of standards
specific to industry rules and
expectations; more industry-specific
self-regulation
►Moving from policies into the code;
signal of integrated compliance
management
Resources
Quintiles, NiSource, Kindred
Healthcare, P&G, Pfizer
Resources
Quintiles, NiSource, Kindred
Healthcare, P&G, Pfizer
Topics
►Healthcare: Food/drug laws,
Medicare part D participation, licensure
and certification
►Pharmaceuticals: science misconduct,
clinical research, marketing
►Financial services: professional duties,
fiduciary duty
►Energy/Utilities: FERC price reporting
►Government contracting: Cost
accounting/reporting, use of third
parties
Topics
►Healthcare: Food/drug laws,
Medicare part D participation, licensure
and certification
►Pharmaceuticals: science misconduct,
clinical research, marketing
►Financial services: professional duties,
fiduciary duty
►Energy/Utilities: FERC price reporting
►Government contracting: Cost
accounting/reporting, use of third
parties
OverviewOverview
ResourcesResources
Sub-TopicsSub-Topics

14. Topic: Technology-Related
© 2016 IntegrityFactor
Overview
Quick ramp up on this topic; can
expect greater expansion in
coming years
Overview
Quick ramp up on this topic; can
expect greater expansion in
coming years
Resources
Cisco, HP, Comcast, IBM
Resources
Cisco, HP, Comcast, IBM
Topics
►Mobile devices: while driving, “Bring
Your Own Device” (BYOD)
►Use of social media (for business and
personal uses)
►Information security; business
continuity
►Information/data privacy; access by
third parties
►Open source software
Topics
►Mobile devices: while driving, “Bring
Your Own Device” (BYOD)
►Use of social media (for business and
personal uses)
►Information security; business
continuity
►Information/data privacy; access by
third parties
►Open source software
OverviewOverview
ResourcesResources
Sub-TopicsSub-Topics

15. Topic: Risk Management
© 2016 IntegrityFactor
Overview
Greater understanding of the means
to reduce risk, not just stop illegal
conduct
Overview
Greater understanding of the means
to reduce risk, not just stop illegal
conduct
Resources
Comcast, Charles Schwab, Clorox,
NiSource, Chevron
Resources
Comcast, Charles Schwab, Clorox,
NiSource, Chevron
Topics
►Internal controls
►Contract review
►Background checks
►Audits
►Business continuity
►Written approvals, exceptions
►Security/crisis management
►Contract compliance
►Working with auditors
Topics
►Internal controls
►Contract review
►Background checks
►Audits
►Business continuity
►Written approvals, exceptions
►Security/crisis management
►Contract compliance
►Working with auditors
OverviewOverview
ResourcesResources
Sub-TopicsSub-Topics

16. Topic: Legal Process
© 2016 IntegrityFactor
Overview
Greater focus on how employees
support the legal process; mostly
centered around Records
Management
Overview
Greater focus on how employees
support the legal process; mostly
centered around Records
Management
Resources
Pulte, Harris, Realogy, PetSmart, CF
Industries, Verizon
Resources
Pulte, Harris, Realogy, PetSmart, CF
Industries, Verizon
Topics
►Regulatory inquiries; government
investigations; court orders
►Duties of Corporate Integrity
Agreements/Deferred Prosecution
Agreements
►Legal holds
Topics
►Regulatory inquiries; government
investigations; court orders
►Duties of Corporate Integrity
Agreements/Deferred Prosecution
Agreements
►Legal holds
OverviewOverview
ResourcesResources
Sub-TopicsSub-Topics

17. Topic: Corporate Structure
© 2016 IntegrityFactor
Overview
As organizations increase in structural
complexity and collaborative
relationships (e.g., subsidiaries,
minority ownership, partnerships,
joint ventures), more focus on
managing related issues
Overview
As organizations increase in structural
complexity and collaborative
relationships (e.g., subsidiaries,
minority ownership, partnerships,
joint ventures), more focus on
managing related issues
Resources
Verizon, Spectra Energy, NiSource,
Leidos, CH2M Hill
Resources
Verizon, Spectra Energy, NiSource,
Leidos, CH2M Hill
Topics
►Affiliate rules
►Organizational conflicts of interest
Topics
►Affiliate rules
►Organizational conflicts of interest
OverviewOverview
ResourcesResources
Sub-TopicsSub-Topics

18. Topic: “Aspirational”
© 2016 IntegrityFactor
Overview
►Some content goes beyond
requirements to higher-order conduct
to meet greater expectations
►Some of this content is still
overarching and not tied to specific
conduct/behaviors
Overview
►Some content goes beyond
requirements to higher-order conduct
to meet greater expectations
►Some of this content is still
overarching and not tied to specific
conduct/behaviors
Resources
Chevron, Visteon, Interpublic,
Danaher, Caterpillar
Resources
Chevron, Visteon, Interpublic,
Danaher, Caterpillar
Topics
►Corporate values (more defined,
better link to mission and code’s
standards)
►Diversity/inclusion; supplier diversity
►Quality
►Innovation
►Sustainability
Topics
►Corporate values (more defined,
better link to mission and code’s
standards)
►Diversity/inclusion; supplier diversity
►Quality
►Innovation
►Sustainability
OverviewOverview
ResourcesResources
Sub-TopicsSub-Topics

19. Implications of More Standards
► More for each employee to know and do
► Need for better training plans
► Activity-based training (put education close to when most needed)
► Re-imaging the code and policy continuum
► Also as resource manual
► As decision-making tool
► Since the overwhelming number of standards and policies
cannot be memorized – need to function more as a guide
© 2016 IntegrityFactor

20. Implications for Investigations
► Need for clear standards to address undesirable conduct
► Provide employees with clear guidance, examples, decision tools
► Provide information and expectations on the investigation process
so employees know what to expect and what is expected of them
► “Good faith” reporting
► Culpability vs. raising one’s own misconduct
► Duty of confidentiality
► Non-retaliation, esp. for supervisors
© 2016 IntegrityFactor

21. Assessing Emerging Risks
► What’s the level of conversation regarding the topic?
► General interest
► Agitation
► Business problems
► Is the topic relevant to your industry? Your business?
► News stories of competitors or others in similar circumstances
► What’s your organization’s risk tolerance?
► How important is reputation and trust to your organization’s
success?
► What ‘s your organizations Ethics & Compliance Program maturity
level?
© 2016 IntegrityFactor

22. Best Practices in Standards
© 2016 IntegrityFactor
Topic Definition Example
Rationale The standard’s
purpose
“Our commitment to sustainability demonstrates our
responsibility to our communities and improves our
business performance.”
Overarching
standard
A crisp statement
of expectations
“We operate our business in a sustainable manner for our
own and future generations’ benefit to foster greater
environmental protection, improvement of local economies
and a better quality of living for workers.”
Definitions Clarification of
terms
“Sustainability is development that meets the needs of the
present without compromising the ability of future
generations to meet their own needs.”
Examples The underlying
issue and standard
in practice
• Use of renewable resources to power company facilities as
a way to reduce our impact on the environment.
• Seeking local suppliers to foster a more vibrant economy
in our communities.
Subtopics Specific areas for
standards to focus
on
Environmental protection, human rights, vibrant local
communities

23. Emerging Risks Resources
► News articles on the emerging topic – this helps to identify the
concern and related business practices
► Corporate codes of conduct or policies
► Try a complex Google search like “code of conduct” (or
“policy”) and “[topic]” (e.g., +“Code of conduct”
+sustainability)
► Business or industry association websites (e.g., Int’l. Chamber of
Commerce)
► Cause advocacy groups (that may develop topic-specific codes of
conduct)
© 2016 IntegrityFactor

24. Thank-you for participating
If you have any questions, please feel free
to email them to:
Jason L. Lunday, IntegrityFActor
jason.lunday@integrity-factor.com
Joe Gerard, Vice President Marketing and Sales
j.gerard@i-sight.com