Where do conduct, culture, and compliance intersect?

Culture has always been fundamental to determining how an organization operates.  Recently, however, the topic of culture has moved to the top of the agenda for regulators, investors, and consumers. Regulators have come to realize that that without a culture of integrity, organizations are likely to view their ethics and compliance programs as a set of check-the-box activities.

Organizations understand that culture is one of the biggest determinants of how employees behave. Strong cultures have two common elements: there is a high level of agreement about what is valued, and a high level of intensity with regard to those values. Organizations with strong positive cultures create trusting relationships with stakeholders and investors and—in turn—stakeholders and investors trust the organization and the brand.

Given the increasing regulatory focus on fostering an ethical culture, organizations are conducting assessments leveraging internal and/or external resources to review programs to ensure both ethics and compliance are addressed. When it comes to developing world-class ethics and compliance programs, the starting point is a positive culture of integrity.

Culture and conduct are lenses that surface the drivers of undesirable behavior & detrimental outcomes and embed conduct in their enterprise-wide risk management framework and decision making process. How is your organization assessing and influencing ongoing shifts in culture and ethics?

  • Is there an owner of the conduct, culture, and ethics agenda at your organization?
  • Are the roles and responsibilities on conduct and culture clear across the three lines of defense?
  • Do you have visibility on business strategies and practices that make your organization vulnerable to wrong behaviors and/or misconduct?
  • Have you defined the operating model around culture and conduct?
  • Have you embedded conduct risk into your risk management framework?

As organizations gain a better understanding of the misconduct taking place in their workplaces, the focus shifts from detective and preventative capabilities to the role that culture plays in the proactive and persistent identification, mitigation, and management of risk.

Interested in more? Read the Deloitte Center for Regulatory Strategy’s Innovation in risk management: Canadian regulatory outlook for financial institutions in 2018.

This article contains general information only and Deloitte is not, by means of this article, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This article is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this article.

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Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see http://www.deloitte.com/about to learn more about our global network of member firms.

Copyright © 2018 Deloitte Development LLC. All rights reserved.

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