Companies are starting to distinguish between non-financial and financial risks in order to continue improving their overall governance and business structures. But non-financial risks, such as ethics, still don’t get the attention they deserve from industry experts.

And this could have real – and financial – implications for your company.

Remember that ethical shortfalls are what triggered a string of financial misdeeds, which led to insider trading probes, investigations and regulatory action. Several high-profile companies collapsed as a result, and some prominent executives remain in prison today. 

Many businesses have relied on the same governance structures for decades but in response to the recent economic downfall followed by the passage of Dodd-Frank, some have started considering newer and more cutting-edge techniques to help better align their existing business model [including:]

(i) Start designing training programs that not only address the company’s code of conduct but also provide employees with guidance on specific issues the organization’s risk management techniques identify. ‘Typical ethical training has been quite poor over the years. Too often it says,  ‘We want you to obey our conduct rules or else you are fired,’ Hanson explains. ‘Risk committees need to focus on the real ethics risk an organization can incur and move its employees in that direction.’

(ii) Having more frequent audits and risk assessments can help companies identify a weak ethical environment ahead of time.

(iii) Frequent communication of the company’s ethical expectations of employees is crucial.

Read more at corporatesecretary.com