• This is how this business works • If I don’t do it, somebody else will • It works, so let’s not ask too many questions • Nobody will notice and nobody will be hurt Opaqueness because the behaviour is unethical there is a strong inclination to not disclose Routinely ask the following questions: • Are you doing what you promised to do? • Are you using your best knowledge and intention in doing it? • Are you doing what public authorities, superiors, colleagues and business partners expect you to do, and if not why? • Are you conforming to the mission and the values of your company, as they are publicly stated? • Will your actions enhance public confidence in your company and industry? • Would you behave similarly if your actions were publicly observed? Source: Ignazio Angeloni, Member of the Supervisory Board of the ECB, Venice, 26 Sep. 2014
Going beyond compliance 12 2 The intent is to expand the role of compliance risk management to be a competitive advantage: – Application of ethical principles: there must be universal adherence to the organisation’s compliance policies and codes of ethics. Directors, senior managers, managers and all other levels of staff must be subjected to these provisions – Greater use of technology to speed development of products and lower compliance costs Organisations that embed compliance into their business behaviors, supported by strong positive ethical considerations: – receive higher levels of customer and employee commitment – enhanced brand recognition and value, and – better stakeholder returns and market capitalisation
Environmental Risk defined Environmental Risk is the risk that the impact of a organisation's activities on the natural environment may result in the organisation failing to meets its financial and non-financial objectives including danger to health and safety, reputational damage and non-compliance with regulation. It also includes external uncertainty impacting an organisation through climate change and the resulting uncertainty in costs of regulation, impact on business practice, investor confidence and business strategy. 12 3
Business impacts from environmental risk 12 4 Environmental risk causes reduced firm value as a result of exposure to: The imposition of increased operating costs arising from compliance with government legislation Fines and penalties for breaches of environment laws Changing consumer preferences and loss of existing customers from the publication of deficiencies in environmental performance Outlawed factors of production causing a change in business process Impact on sustainability of debtors and supply chain Rising insurance costs Shifts in investor support Greater risk to physical assets Greater regulatory uncertainty causing difficulty in making long-term investment decisions
Emission orientated risk management strategy Avoid emissions or, as a minimum, contain the emissions resulting from any incident: What can the corporation do in its operations to reduce the risk of emissions external to the corporation?
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