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The Board’s Role in Safeguarding Reputation
zEthics, Inc. introduces a cloud computing application that provides an independent assessment of corporate culture on an ongoing basis to safeguard an organization’s reputation.
At a recent Arizona Chapter meeting of the National Association of Corporate Directors, a panel of experts including Professor Charles M. Elson and Professor Robert E. Mittelstaedt expressed concern about the recent spate of insider trading scandals making headlines in national publications and what these ethical breaches may say about the core values of our society.
Management mischief and lax corporate cultures can lead to reputational damage, loss of revenues, higher legal fees, and possible fines and sanctions. As is typical in large organizations, senior leadership does not want to hear bad news. Small problems can be ignored and eventually lead to bigger problems that appear on the front page of a national newspaper.
In 2010, Johnson & Johnson was involved in at least 11 major recalls. Chief Executive Officer William Weldon maintains the company’s quality control issues have been “overshadowed by one company” (McNeil), and maintains “this is not a systemic problem.” At Johnson & Johnson, each division has its own culture. Weldon’
The California Public Employee Retirement System (CalPERS) has also taken a hit to its reputation as a result of recent scandals involving Board members and placement agents. Recent efforts to prevent future scandals have yet to restore trust and confidence in the system.
How can the Board proactively safeguard the organization’
The Board has a fiduciary responsibility to engage an independent party to assess people, policies, process, systems and technologies on an ongoing basis to substantiate to external stakeholders that the organization is committed to the core values of integrity, transparency, accountability, and risk oversight.
To safeguard the organization’
Finally, the Board must engage an independent party to rapidly elevate risk and operational intelligence to the C-Suite and Board to ensure senior leadership is willing to accept bad news from subordinates and initiate appropriate actions.
Failure of the Board to independently verify that the organization’
Why risk paying a whistleblower millions when, with very little time and effort, you can create and maintain a culture where that doesn't happen.
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zEthics is a start up based in Phoenix, Arizona that takes a holistic view of risk, integrating External Risk Assessments with Enterprise Risk Management (ERM) systems. zEthics introduces the first cloud computing application for Enterprise and External Risk Management (EERM), providing publicly traded corporations, investment companies as well as federal and State agencies a holistic view of risk. zEthics provides the diagnostic tools to align risk and performance to create a risk intelligent organization.