Trust in corporations is at its lowest point in history and the spot light on corporate ethics and culture has never shone so bright. Increasingly, regulators, boards and executives are recognising the significant role of ethics and culture in enabling responsible and risk aware business practices. Today, the responsibility sits squarely with the board.
Underlying most high-profile organisational failures, public scandals and significant compliance breaches, is people. The way people think, behave and make decisions has a direct impact on the organisation’s ability to achieve strategic objectives, enhance its relationships, and protect itself from harm.
Boards and Executives are responsible for ensuring the ethical foundations of the organisation is reflected in the culture of the business, supports the identification and mitigation of risks, and delivering on its customer promises.
A risk aware and ethical culture is a competitive advantage, enabling organisations to thrive and remain resilient. Driven by shared mindsets and behavioural norms, culture is critical in shaping and supporting the way people think, behave and make decisions. When the day-to-day work pressures are exerted, or policies may be unclear on the right course of action, people instinctively do the right thing.
Leaders should seek to accurately assess their ethical foundations and the current culture and whether it supports their strategy by asking the following questions:
How do your people make decisions in alignment with the ethical foundations of the organisation, its risk appetite and the strategic objectives?
Are your leaders actively shaping and monitoring the ethical foundations and culture of the organisation?
How do your people understand, identify and manage risk, particularly when under pressure or in ambiguous and uncertain situations?
Do the current frameworks, systems, processes and controls support the desired culture across the organisation?
How do you monitor the culture with reliable and valid approaches, leveraging data analytics, and aligning with leading practice and regulatory expectations?
How do you change the culture to bring it into alignment with your aspirations, in order to achieve your strategic objectives?
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