The Ethics Risk Assessment™

How do you know if your company's compliance and ethics program are meeting the higher standards demanded by regulators and the Federal Sentencing Guidelines?

Working Values and the Metrus Group have developed The Ethics Risk Assessment (ERA), a web-based survey tool to assess employee attitudes and awareness of critical integrity and antifraud risks as part of a complete ethics program evaluation.

ERA measures employee perceptions and attitudes on 36 key questions that provide clear guidance on how well the company is doing in meeting its compliance goals and where it needs to focus its training and communication efforts.

Key Benefits:

• Maximize limited training and communication dollars and resources by focusing attention on the areas that are generating the greater risk.
• Provides a baseline measurement for leadership to gauge progress in meeting ethics goals.
• A critical antifraud diagnostic to measure an organization's progress in creating an environment where employees feel secure enough to report potentially fraudulent activities.
• Meet the Federal Sentencing Guidelines requirement for periodic measurement of the effectiveness of an organization's ethics and compliance program.
• Survey results will be used as part of annual program review to determine risk areas requiring additional focus for communication and learning intervention.

Key Features:

• Ease of use—only requires 10-15 minutes of respondent's time.
• Auto-generated report outlines impact of results and suggested remedial course of action if required.
• 1 hour of consulting with a senior ethics professional to review the results and help direct next steps.
• Flexible design: two demographic options (with up to 10 selections per option) permit the organization to generate up to 100 individual reports, such as sales personnel in Region A, or Director level personnel in Region C.
• Demographic Reports will show how each response compares with the overall population in order to focus on areas that need specific attention and intervention.

ERA is the product combining the skills of two industry leaders, Working Values and The Metrus Group.

Working Values has been a leading developer of values-based ethics and compliance solutions for over 12 years. ERA is a core element in Working Values' Integrity Alignment Process by providing key baseline information about ethical behavior. Since 1988, Metrus Group has provided high performance business tools, including balanced scorecards, employee surveys, strategy mapping, supplier, customer, and internal alignment surveys, business acumen training, and performance management.

Background
The Ethics Risk Assessment provides a critical component in an organization's arsenal to reduce the risk of fraud and criminal conduct and maintain high ethical standards. This Assessment is used in conjunction with an organization's Code of Ethics and its internal controls management.

• The Code of Ethics should reflect the organization's efforts to manage its legal risks as indicated by the standards and policies outlined in the code document.
• The organization's internal control reflects its efforts to manage risks related to insufficient controls and processes.

This Assessment supports the organization's efforts to manage its Ethics Risks by providing the Board of Directors, the Audit Committee and Ethics and Compliance managers with data on the success of the organization's efforts to maintain an effective 'tone at the top' and the ethical environment in the organization.

Best practices in maintaining high standards dictated by the Federal Sentencing Guidelines as well as the audit governing bodies emphasize the need to be alert to employees' perceptions in the implementation and enforcement of code standards and internal controls.

The AICPA recently noted that perceptions of management's commitment to uphold ethical standards influence the degree to which employees and other parties follow the code and/or report violations of the code. The extent to which management is perceived to be committed to conduct sanctioned by the code will influence the organization's ability to deter, prevent, or detect management override of internal controls and violations of the code. Equally important, an evaluation by the audit committee of how effectively management communicates information about the code and motivates employees to comply with the code also provides key information about the culture. Employee awareness and training about the code may signal information about management's commitment to the code and indicate the likelihood that employees will report management code violations. Conversely, a lack of awareness by employees may signal management's lack of commitment to ethical conduct.

How to Use the Survey
The results of the Ethics Risk Assessment should be used to create a benchmark for the organization's program and serve as a basis for critical comparisons of data.

In developing an action plan, an organization should look for variances in relative scores among the six categories as well as among the various demographic segments chosen to be surveyed. The six categories known as the B CLEAR categories are: Beliefs, Communication, Leadership, Equity, Awareness and Rules and Regulations.

The survey results will help the organization deploy more focused ethics and leadership training to the areas that need it most.

The organization should revisit the survey periodically to determine if sufficient progress is being made in closing gaps the organization identified in particular categories and among selected demographic segments.

The Survey
Each of the six B CLEAR categories contains 6 multiple-choice questions. The client has the option to include up to two demographics, (such as regions, business units, job function) with up to ten choices within each demographic, thus providing a high degree of specificity for generating reports.

Administrators use a simple web interface to choose selected reports based on the chosen demographics.

Results of each demographic can be compared against the whole population as well as other demographics to determine trends and areas requiring special focus.

The survey purchase price includes an hour of consultation with a business ethics advisor who will review the results and provide suggestions for next steps. The organization may look to develop an action plan to address areas of concern, either organization-wide or within specific demographics.

B CLEAR Categories
Each category reflects a key issue area that demands its own action plan to address weaknesses and deficiencies. The 6 categories combine to create a complete picture of the ethical culture of the organization.

Beliefs
Embedded cultural standards and norms of behavior
Six questions addressing the participants' attitudes regarding the company's values and how they relate to day to day work.

Employees who feel that their values are consistent and compatible with the company's are more likely to take an active role in ensuring that they, and the people around them, act with integrity. Nobody works in isolation from the people and the culture around them. Even employees with strong personal values are less inclined to take action to 'do the right thing' if that is not part of the culture of the company.

Communication
Unrestricted and fear free, downward, upward, and lateral communications
Six questions addressing the participants' perceptions of how well managers create an environment that encourages open discussion of issues as well as how well they respond to issues when they arise.

Most integrity troubles can be linked to two types of causes: Employees don't report unethical conduct that they see, or they don't feel comfortable bringing bad news about mistakes or missed objectives to their boss. In either instance, critical information is not communicated that perhaps could allow management to resolve the issue before it becomes a problem.

Leadership
Belief that leaders can always be trusted to do the right thing
Six questions addressing the participants' perceptions of how well managers set the right tone at the top and act consistent with the company's values and policies.

It is not enough that a company's leadership is comprised of people with high degrees of personal integrity. Leaders must actively demonstrate that integrity matters through their words and actions. Employees look to their leaders to see how they handle tough business decisions with integrity. They also look to their leaders to see which values are truly important and which are given only lip service. Employees recognize the importance of the ethics message is more determined by how the leadership integrates integrity into day to day business activity than it is by issuing broad statements without active follow through.

Equity
Perceptions of justice, fairness, and consistency
Six questions addressing the participants' perceptions of how well the company treats all of its stakeholders, both internal and external.

Every day your employees form impressions about how fairly they are treated. Was the process used to evaluate my performance just? Does Jenna have the same opportunities as John? Are there one set of rules for the executives, and another for the rank-and-file? Beyond the importance of addressing the basic standards of fair-play, these issues are important to the bottom-line of your business.

Awareness
Education that goes beyond merely informing people of the rules
Six questions addressing the participants' perceptions of how well the participants understand what is expected of them and how ethical behavior relates to their job and the company's business goals.

In years past, simply recording employee attendance at mandatory ethics training could provide employers with an affirmative defense. Based on recent proclamations by the SEC, U.S. Sentencing Commission, and the Department of Justice, however, training has become a necessary but insufficient aspect of your ethics and integrity strategy. The new standard has become a true inculcation of the rules and regulations into the core of the company.

Reducing the risks of fraud and criminal activity requires coordinated compliance and ethics training: Compliance training to inform employees on expected standards of behavior and ethics training on how to create a positive environment as a preventative measure and how to address ethical issues when they arise.

Rules and Regulations
Governance, formal systems and processes that support ethical conduct
Six questions addressing the participants' attitudes towards the rules and regulations and whether they are effective in guiding behavior.

Management override of internal controls is a leading source of fraud in organizations. This dimension is not intended to assess the adequacy of the rules and regulations your organization has put in place regarding breaches of ethical conduct; rather, it is intended to evaluate how effectively the processes and systems that support day-to-day application of the rules and policies are being implemented and communicated. Examples of such systems include;

• Developing well-understood (and trusted) channels for reporting violations and clear routes of appeal,
• Continuing education programs to evaluate understanding and anonymous ways for ethical violations to be reported should an employee feel uncomfortable using more formal channels.

Pricing
Pricing for the B CLEAR Ethics Risk Assessment is based on the number of the participants and the number of reports. Organizations may select to poll the entire organization or a representative sample of Base Price includes one global report and 1 hour of consultation:

The company may choose up to 10 selections for each of the two demographic segments, for a total of 100 possible reports. The overall organizational report is included in the cost of the survey, the cost for additional reports is:

How to Order
The Ethics Risk Assessment survey is available for order from the web. For more information, please visit us at www.metrusgroup.com/ethics/clients.php or call Working Values at (800) 208-3535.