Benchmark Your Whistleblowing Hotline Against EMEA ...... Hotline Benchmark Statistical Snapshot •...

Benchmark Your Whistleblowing Hotline Against EMEA & APAC Organisations:

Where Do You Rank?April 28, 2016

P R E S E N T E D B Y

Operations Manager, Advisory Services NAVEX Global

Carrie Penman

Chief Compliance Officer & Senior Vice President, Advisory ServicesNAVEX Global

Edwin O’Mara

Agenda

• Introductions

• Benchmarking Methodology

• Key Findings

• Key Takeaways & Best Practice Recommendations

• Additional Resources

• Q&A

Our Ethics & Compliance Ecosystem

Examples of European Whistleblowing Legislation

• UK’s FCA/PRA Senior Managers Regime Whistleblowing Regulations:

All UK Financial Institutions with over £250m assets and Insurers subject to the Solvency II Directive

Enforceable from September 7th, 2016

• Netherlands ‘House for Whistleblowers’ Act:

All Dutch organisations with more than 50 employees

Enforceable from July 1st, 2016

• Italian Consolidated Banking Act new Legislative Decree no 72/2015:

All Italian banks and parent companies

Compliance with the new regulations required from 31 December 2015

Benchmarking Methodology

Hotline Benchmark Statistical Snapshot

• Our database starts with 12,500+ NAVEX Global clients

• We narrowed down our clients to include only those EMEA and APAC clients that received 10 or more reports through our hotline/incident management systems in 2015, which represents 19 million employees.

• These clients received approximately 10,500 total reports in 2015 representing 98 percent of our total EMEA & APAC report database

• Our report reflects all intake methods: web, hotline, open door, walk-in, mobile and email

• We use medians (or midpoints) rather than averages to reduce the impact of outliers

Normal ranges identify extreme data points as potential areas of concern

Medians and ranges provide context for benchmarks

Key Findings

K E Y F I N D I N G # 1

Report Volume per 100 Employees

The Only Sure Things:

Too many calls is not good news. Too few isn’t good, either.

Median Report Volume per 100 Employees

Source: NAVEX Global's 2016 EMEA & APAC Ethics and Compliance Whistleblower Hotline Benchmark Report

Survey QuestionWhy do you think whistleblower reporting volume is low in EMEA and APAC? (tick one answer that best applies)

A. Employees may not trust that a report will be taken seriously or that they will receive a timely response

B. Employees might not be aware of all the whistleblowing channels available or how to use them

C. Employees prefer to report to an external body, industry association or individual outside of the organisation

D. Cultural barriers or the belief that management discourages the use of this reporting channel

E. Employees fear retaliation

F. I don’t view the reporting volume as low

G. Other

Survey QuestionHow can organisations improve or increase their whistleblower reporting volume?

A. More awareness & training to help employees know how, and what, to report

B. Encouragement from senior management and the board for a better ‘speak-up’ culture

C. Providing more reporting channels for employees to use

D. Documenting and managing reports received from sources outside of a telephone hotline, such as walk-ins., email, etc

E. Supporting departments outside of E&C to document reports (HR, Audit, Security)

F. None: We believe we receive an appropriate number of reports

G. Other

Report Allegation Categories

Categories of Reports Used

Categories of Reports Remain Relatively Consistent

Anonymous vs. Named Reporters

Survey QuestionWhat is your organisation’s philosophy about anonymous reporting?

A. Senior leaders resist accepting anonymous reporting as equally credible as named reporting

B. We evaluate all reports as equally credible, whether named or anonymous

C. We don’t accept anonymous reporting

D. Other

Anonymous Reporting Rate

Named vs. Anonymous Substantiation Rate

Anonymous Reporter Follow-Up Rate: More Education Needed

Substantiated Reports

Substantiation Rate

Substantiation Rates Fall in Four of the Five Allegation Categories

Overall Median Substantiation Rate in 2014 = 37%Overall Median Substantiate Rate in 2015 = 36%

Case Closure Time

Significant Case Closure Time Increase

Source: NAVEX Global's 2016 EEMA & APAC Ethics and Compliance Hotline Benchmark Report

Case Closure Time Increases in Three of the Five Allegation Categories

Median Case Closure Days in 2014 = 37 days Median Case Closure Days in 2015 = 44 days

Survey Question

Why do you think case closure time is increasing?

1. Resource constraints: Resources not keeping pace with volume, “less serious” cases get stalled

2. Case complexity: Cases are taking more time to resolve

3. Inefficiencies: Processes and tools used to assign and execute investigations are not as streamlined as they should be, resulting in lag time

4. Ownership confusion: Not clear who owns resolution for cases

5. Other

Report Intake Methods

Comparison of Reporting Methods

Survey Question

How frequently does your organisation carry out an awareness campaign on your whistleblower hotline?

More than once a year

Once a year

Once every 1-2 years

Every 2-3 years

We are planning our first campaign

We will not be carrying out an awareness campaign in the near future

Key Takeaways & Best Practice Recommendations

What May Cause Changes in Reporting Trends?

• Training and communication initiatives

• Published (or rumours of) internal cases and disciplinary actions

• Internal restructuring/management changes/layoffs

• Policy changes: Code or HR

• Mergers, acquisitions, changes in lines of business

• Regulatory changes

• News articles re: industry, competitors, or the latest compliance scandal

• A real problem

Some Advice and Best Practices:

• Run your data different ways

• Research anomalies

• Drill down to locations and businesses, issue types and topics,

anonymous calls, substantiated allegations

• Sometimes you “don’t know it until you see it”

• Follow your gut instincts on brewing problems

• Track and report on quality of case management and investigations

• Track disciplinary actions by offense, level of employee, or group…

• Use a robust incident management system

• Nearly Double Risk Visibility: Documenting reports in an incident management system creates nearly twice as much visibility into potential E&C risks

• Work Smarter: Customised workflows simplify report management tasks, helping you capture, assign and resolve cases more effectively and consistently

• See Trends: Advanced analytics gives you the ability to see programme gaps, measure effectiveness, proactively spot trends and identify and address issues

• Make it Easier to Document Issues: Custom web forms allow you to more efficiently capture and route reports and make it easier to document issues

• Better Protect Your Organisation: More documentation also provides a stronger legal defense in the event of a lawsuit or regulatory action

Incident Management Systems Create Exponential Visibility & Programme Effectiveness

1) Evaluate low report volumes

2) Educate employees on the importance of following up on anonymous reports

3) Work on getting case closure times within best practice ranges

4) Improve data accuracy by tracking all reports in one centralisedincident management system

5) Encourage employees to see your whistleblower hotline as a resource for information, not just a channel for reporting

6) Make it easy for employees to report when awareness of compliance issues is top-of-mind

6 Key Takeaways

Additional Resources

NAVEX Global offers many valuable resources for helping you increase program effectiveness by leveraging your hotline and incident management data. Visit our website www.navexglobal.com to find these resources and more:

White Papers:

• Whistleblower Hotlines and Case Management Solutions—Major Challenges and Best Practice Recommendations

• Key Elements for Effective Compliance Programme Board Reporting

• Maximizing the Benefits of Hotline Data: Analysis and Benchmarking

• The New UK Whistleblower Rules & Are Concerns About the U.K.’s New Whistleblower Rules Misplaced?

On-Demand Webinars:

• Whistleblowing & Retaliation: Legal Developments And Practical Advice

• How Do I Prove My E&C Programme is Effective? The Art & Science of Effectiveness Measurement

• Benchmarking your Compliance Programme in EMEA & APAC

Learn More About Our Solutions:

• Hotline Reporting Solutions

• EthicsPoint Incident Management Software

• Strategic Consulting: The Advisory Services Team

Survey QuestionI’d like to speak with a NAVEX Global expert about…check all that apply

Seeing a demo of incident management for tracking and responding to reports from multiple channels including; hotline, open door, mobile, web-based and email

Assessing the effectiveness of my current whistleblower hotline incident management solution

How to create a ‘speak-up’ culture within my organisation

Improving my ethics or compliance programme, eg; code of conduct review, programme strategy, risk or culture assessment, board training

Best practice advice on other compliance programme challenges including; E&C training, policy management, third party due diligence

Advisory engagement on hotline reporting and usage

See demos of our other ethics and compliance solutions including Policy Management and Online Training

Please contact me to discuss another requirement

I would like to register for the London Roundtable on 7th June

Thank You for Your Participation

Carrie PenmanChief Compliance Officer & Senior Vice President, Advisory Services

cpenman@navexglobal.com

Edwin O’MaraOperations Manager, Advisory Services

eomara@navexglobal.com

Benchmark Your Whistleblowing Hotline Against EMEA ...... Hotline Benchmark Statistical Snapshot •...

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