LRN’s 2013 Ethics & Compliance Leadership Survey Report

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LRN’s has published its 2013 Ethics & Compliance Leadership Survey Report. This sixth annual Ethics & Compliance Leadership Survey Report provides guidance and specific recommendations on critical risks and challenges. The report is based on a survey of more than 180 ethics and compliance leaders from across industries and geographies.

This year’s report has a new metric: the Program Effectiveness Index (PEI). The US Sentencing Guidelines, the UK Bribery Act, regulators, and law enforcement all talk about having an effective compliance program. LRN looks at three major roles to address the Program Effectiveness Index:

  1. a network of corporate controls
  2. facilitator of business operations in regulated contexts
  3. promotion of ethical conduct and culture

At first I was startled to see the Program Effectiveness Index measured on a scale from 0-1. I forgot about decimal points for a moment. In its survey, LRN reports an average PEI score of  0.71, with the scores distributed across a typical bell curve. The highest score was a 0.98 and the lowest was a 0.23.

The report highlights five attributes that distinguish the most effective ethics and compliance programs from the least:

  1. Celebration of acts of ethical leadership
  2. Adapting program to changing business needs
  3. Focus on employees as a key element of risk assessment
  4. Access to and support of senior management
  5. Management’s use of risk data in decision-making

The survey respondents consisted of 11% financial services and 10% insurance, with the rest covering a broad spectrum of industries. The report does not dovetail neatly with the needs of a private fund manager.  Of course it is always useful to see what others are doing with their programs, not just your peers.