Some ethical risks are relatively easy to spot: over generous gifts from suppliers for example. Other ethical risks can be more difficult to find, yet may carry just as much exposure to your firm’s reputation. How do you make sure that both the easy and the difficult are picked up by your risk radar?
That’s not the only problem. It’s easier at times to spot the symptoms of an ethical risk, rather than its underlying cause. So the over generous gifts from suppliers could be a symptom of something wrong with supplier relationships. While you can focus on controlling over generous gifts, it is more productive in the long run to recognise and influence the underlying circumstances that make such gifts tenable.
To ensure that you pick up both the obvious and less obvious, the cause as well as the symptom, it helps to structure your thinking around three primary sources of ethical risk: the market, the firm and the employee. I’ll outline each below.
Ethical risks at the market level come from the business environment within which your firm operates. It can be gauged from factors such as:
Ethical risks at the firm level come from how the firm is organised and the way in which it approaches ethics. It can be gauged from factors such as:
Ethical risks at the employee level come from how the behaviour of individual employees is managed. It can be gauged from factors such as:
Adopting a structured approach to mapping out the ethical pressures that your business is subject to ensures that ethics initiatives deliver tangible benefits to the business. Once mapped, of course, they then needed to be weighed up and priorised.