Measuring ethics is starting to become mainstream in insurance. This is because the soon to be introduced senior insurance managers regime will result in an increased level of reporting on ethical issues. How your firm handles this will be watched by the regulator, for it sends a signal about the culture of your firm.
Much of this ethics reporting will be internal; little will emerge into the public domain. That’s a pity, but the regulator’s view is that external reporting would be cautious, while internal reporting could be more frank and insightful. Their main priority is to see those in charge of regulated firms (and those overseeing those in charge) receiving management information about how the firm conducts its business. Those executives and non-executives need to understand what is happening, in order to question why it is happening.
Take whistleblowing for example. The regulator expects to see a firm’s senior governance committee receiving management reports on whistleblowing from the non-executive director nominated as the whistleblowers’ champion. In that report should be details of:
…to name but four.
The flip side of ethics metrics being reported only on an internal basis could of course be a dearth of comparative data for use in benchmarking. There is however a lot of survey data around that tracks the performance of the financial services sector on a variety of ethical issues. Sticking with whistleblowing, there’s this ‘indicative data’ from the FCA:
|Per Annum Data||Large firm(e.g. 10,000 staff)||Medium firm(e.g. 500 staff)||Small firm(e.g. 50 staff)|
|Whistleblowing reports||Over 100||Over twelve||One or two|
|Staff training in whistleblowing||450 person days||20 person days||25 person hours.|
…and there are other sources for metrics such as type of wrongdoing, ethical distance, the harm being done and the profile of both the whistleblower and wrongdoer.
Whistleblowing is what I call a ‘firm driven’ ethical risk: it’s largely driven by your firm’s culture. Your firm’s ethics risk assessment (you have done one, haven’t you?!) will also have uncovered ethical risks that are market driven and employee driven. And the prioritisation carried out as part of that ethical risk assessment will give you a good idea of what you should be focusing your measuring and reporting on. Beware: don’t be tempted to measure and report on the ethical issues with data that is easiest to come by.
What all this then does is create a continuum, starting with ‘what’s important to our firm’, then ‘how does ethical issues affect that’, followed by ‘how are we performing on those issues’ and ‘what should we do to get to where we need to be’; and ending with ‘…and this is what we got out of doing all this.’ Your measuring and reporting should be supporting this.