This article, written by Eric Feldman, was published in the February 2014 edition of Security Management Magazine at: http://www.securitymanagement.com/article/building-ethical-culture-0013131
Building an Ethical Culture
In a healthy organizational culture, there is a natural, not forced, focus on business ethics, and ethical practices are integrated into the fabric of doing business. Coupled with a strong anti-fraud program, foundational ethics policies result in a decreased risk of fraud. For example, organizations with a published and publicized code of conduct had a 27 percent lower median loss, and a 53 percent reduction in fraud duration, according to a study by the Association of Certified Fraud Examiners. The same study found that organizations with whistleblower incentives had a 31 percent lower median loss, and a 59 percent reduction in fraud duration.
The costs to the bottom line when companies don’t take steps to prevent fraud go well beyond the direct dollar impact of any actual fraud that occurs. There are the related costs incurred from the impact on the brand as well as the more concrete costs of government enforcement actions. In 2012, for example, the Securities and Exchange Commission alone brought 734 enforcement actions against companies, resulting in more than $3 billion in penalties and other fines…
