2017 Ethics & Compliance Hotline & Incident Management Benchmark Report Webinar

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1 2017 Ethics & Compliance Hotline & Incident Management Benchmark Report Webinar Presented by Carrie Penman Chief Compliance Officer & Senior Vice President, Advisory Services Edwin O Mara Operations Manager, Advisory Services Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 0

Edwin O Mara Operations Manager, Advisory Services

2 Presented By Carrie Penman Chief Compliance Officer & Senior Vice President, Advisory Services Edwin O Mara Operations Manager, Advisory Services Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 1

3 Agenda Introductions Our Benchmarking Methodology Business Imperatives of Benchmarking Key Findings Key Takeaways & Best Practice Recommendations Q&A Additional Resources Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 2

6 Hotline Benchmark Statistical Snapshot Our database starts with 12,500+ NAVEX Global clients Of those 5,132 received a report in 2016 through NAVEX Global s Hotline and EthicsPoint Incident Management solutions 2,382 clients received 10 or more reports in 2016 (representing 38.5 million employees) These 2,300+ clients received approximately 1,000,000 reports in 2016 Data reflects all reports documented in clients EthicsPoint Incident Management system regardless of reporting channel (web, hotline, open door, mobile, , mail, etc. ) Data covers 26 industries, and an additional 45 sub-industries 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 Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 5

Key Finding #1 Report Volume per 100 Employees

Median Report Volume Increases to an All-Time High Source: NAVEX Global's 2017 Ethics and

What do you think is the biggest driver of report volume

Impact of Using a Unified Incident Management System Source: NAVEX Global's 2017 Ethics and

What is your organization s approach to documenting E&C

13 Health Care Leads in Reporting Volume Highest Rate 1) Health Care 2) Not for Profit 3) Real Estate 4) Pharmaceuticals 5) Retail 6) Agriculture, Forestry, Fishing & Hunting 7) Arts & Entertainment 8) Energy & Utilities 9) Commercial Transportation 10) Consumer Manufacturing Lowest Rate Overall Median Rate: 1.4 reports per 100 employees 11) Finance & Insurance 12) Security 13) Business Support Services 14) Food Services 15) Construction 16) Aerospace & Defense 17) Automotive Transportation 18) Government 19) Professional, Scientific & Technical Services 20) Education 21) Media 22) Mining 23) Computer Services, Hardware & Software 24) Industrial Manufacturing 25) Wholesale Trade 26) Electronics Source: NAVEX Global's 2017 Ethics and Compliance Hotline Benchmark Report Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 12

Key Finding #2 Report Allegation Categories

Categories of Reports Used Source: NAVEX Global's 2017 Ethics and Compliance

16 Categories of Reports Remain Relatively Consistent Allegation Categories 2012 Median 2013 Median 2014 Median 2015 Median 2016 Median Accounting, Auditing and Financial Reporting 3% 3% 2% 2% 2% Business Integrity 17% 18% 17% 15% 14% HR, Diversity and Workplace Respect Environment, Health and Safety Misuse, Misappropriation of Corporate Assets 69% 73% 69% 71% 72% 7% 7% 6% 5% 7% 6% 6% 6% 7% 5% Source: NAVEX Global's 2016 Ethics and Compliance Hotline Benchmark Report Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 15

17 Industries with the Highest Median Reporting Rate by Allegation Category Source: NAVEX Global's 2017 Ethics and Compliance Hotline Benchmark Report Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 16

21 Education Leads Anonymous Reporting by Industry Highest Rate 1) Education 2) Automotive Transportation 3) Electronics 4) Mining 5) Consumer Manufacturing 6) Security 7) Industrial Manufacturing 8) Government 9) Construction 10) Not for Profit Lowest Rate Overall Median Rate: 58% 11) Commercial Transportation 12) Finance & Insurance 13) Wholesale Trade 14) Energy & Utilities 15) Arts & Entertainment 16) Health Care 17) Professional, Scientific & Technical Services 18) Computer Services, Hardware & Software 19) Retail 20) Media 21) Agriculture, Forestry, Fishing & Hunting 22) Business Support Services 23) Real Estate 24) Food Services 25) Aerospace & Defense 26) Pharmaceuticals Source: NAVEX Global's 2016 Ethics and Compliance Hotline Benchmark Report Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 20

Key Finding #4 Substantiated Reports Copyright

24 Overall Substantiation Rate by Industry Highest Rate 1) Media 2) Arts & Entertainment 3) Agriculture, Forestry, Fishing & Hunting 4) Real Estate 5) Health Care 6) Pharmaceuticals 7) Retail 8) Computer Services, Hardware & Software 9) Business Support Services 10) Not for Profit Lowest Rate Overall Median Rate: 40% 11) Electronics 12) Food Services 13) Energy & Utilities 14) Finance & Insurance 15) Professional, Scientific & Technical Services 16) Government 17) Consumer Manufacturing 18) Security 19) Construction 20) Commercial Transportation 21) Industrial Manufacturing 22) Aerospace & Defense 23) Education 24) Wholesale Trade 25) Mining 26) Automotive Transportation Source: NAVEX Global's 2017 Ethics and Compliance Hotline Benchmark Report Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 23

Substantiation Rate by Allegation Category Source: NAVEX Global's 2017 Ethics and

Case Closure Shows Improvement in 2016 Source: NAVEX Global's 2017 Ethics and

What do you think was the biggest factor in the decreasing case

30 Industry Case Closure Times Highest Rate 1) Mining 2) Computer Services, Hardware & Software 3) Electronics 4) Government 5) Pharmaceuticals 6) Automotive Transportation 7) Not for Profit 8) Real Estate 9) Agriculture, Forestry, Fishing & Hunting 10) Food Services Lowest Rate Overall Median Rate: 42 Days 11) Education 12) Energy & Utilities 13) Professional, Scientific & Technical Services 14) Construction 15) Security 16) Industrial Manufacturing 17) Finance & Insurance 18) Business Support Services 19) Media 20) Aerospace & Defense 21) Commercial Transportation 22) Consumer Manufacturing 23) Wholesale Trade 24) Health Care 25) Arts & Entertainment 26) Retail Source: NAVEX Global's 2017 Ethics and Compliance Hotline Benchmark Report Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 29

Web Reporting Continues to Trend Up Source: NAVEX Global's 2017 Ethics and

Substantiation Rates by Report Intake Method Source: NAVEX Global's 2017 Ethics and

Key Finding #7 Reports of Retaliation Copyright

Where does retaliation prevention fall on your list of E&C program

36 Organizations Still Not Getting the Chance to Address Retaliation Allegations Internally Source: NAVEX Global's 2017 Ethics and Compliance Hotline Benchmark Report Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 35

Retaliation Substantiation Rates Remain Elevated Source: NAVEX Global's 2016 Ethics and

Key Finding #8 Geographical Data Copyright

Geographic Reporting Source: NAVEX Global's 2017 Ethics and Compliance

Substantiated reports by Geography Copyright

Key Finding #9 Organizational Employee Count

Report Volume by Organizational Employee Count Source: NAVEX Global's 2017 Ethics and

Anonymity and Case Closure by Organizational

Ethics and Compliance Hotline Benchmark Report

Overall Substantiation Rate by Organizational Employee

Key Takeaways & Best Practice Recommendations

47 6 Key Takeaways 1) Increase focus on anti-retaliation efforts 2) Continue work on getting case closure times back within best practice ranges 3) Get a more complete picture of your risks by documenting all reports in one centralized incident management system 4) Make the business case for matching your report volume with appropriate resources 5) Encourage employees to see your hotline as a resource for information, not just a channel for reporting 6) Take advantage of the new data this year relating to geography and organizational size Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 46

48 Moving Beyond the Basics Incident Management Systems Create Exponential Visibility & Program Effectiveness Nearly Double Risk Visibility: Documenting reports from all intake channels (not just web & hotline) in an incident management system creates nearly twice as much visibility into potential E&C risks Work Smarter: Customized workflows standardize and simplify report management tasks, helping you capture, assign and resolve cases more effectively, efficiently and consistently See Trends: Advanced analytics gives you the ability to see program gaps, measure program 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 for employees and managers to document issues Better Protect Your Organization: More documentation also provides a stronger legal defense in the event of a lawsuit or regulatory action Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 47

49 Moving Beyond the Basics Industry-Specific Benchmarking Provides More & Better Insight Into E&C Health As our industry ranking slides showed, using accurate industry-specific benchmarking is critical, as there can be striking differences in benchmarks across industries. Industry-specific benchmarking can help you, your board and your senior leadership understand critical issues such as: Are our metrics consistent with or out of line with peers? What E&C trends are prevalent or unique in our industry and which ones should we focus on? Are there opportunities to achieve a competitive advantage by adding focus or resources to an aspect of our E&C program that may be an issue for competitors? Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 48

51 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 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 Program Board Reporting Maximizing the Benefits of Hotline Data: Analysis and Benchmarking On-Demand Webinars: Whistleblowing & Retaliation: Legal Developments And Practical Advice How Do I Prove My E&C Program is Effective? The Art & Science of Effectiveness Measurement Learn More About Our Solutions: Hotline Solutions EthicsPoint Incident Management Integrity Diagnostics Custom Benchmarking Strategic Consulting: The Advisory Services Team Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 50

Thank You for Your Participation Carrie Penman, CCO & SVP of Advisory Services cpenman@navexglobal.

52 Thank You for Your Participation Carrie Penman, CCO & SVP of Advisory Services Edwin O Mara, Ops Manager, Advisory Services eomara@navexglobal.com Copyright 2017NAVEXGlobal,Inc. AllRightsReserved. Page 51

A Framework for Managing Crime and Fraud

A Framework for Managing Crime and Fraud ASIS International Asia Pacific Security Forum & Exhibition Macau, December 4, 2013 Torsten Wolf, CPP Head of Group Security Operations Agenda Introduction Economic