Corporate Risks and Leadership

What Every Executive Should Know About Risks, Ethics, Compliance, and Human Resources

Eduardo Esteban Mariscotti, Eduardo E. Mariscotti

• Publisher: Productivity Press
• Year: 2020
• Print ISBN: 9780367480370
• eBook ISBN: 9781000068870
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The context of business has been changing for companies in recent years, and following numerous corporate and accounting scandals, many countries have increased the number of national and international regulations designed to ensure transparency and compliance with the law. Because of the existence of these new regulations, the level of control, the severity of sanctions by governments, and the amount of the fines for noncompliance have increased dramatically.

In parallel, with the technological revolution in communications, business management has become more transparent, and any negative event is uploaded to social networks and shared with an indeterminate number of people. This change in the regulatory, sanctioning and technological context has forced large companies to rethink risks, investments and budgets to deal in this more complex environment.

To transition to this change, some companies have included ethics and compliance programs in their corporate agenda, along with marketing and sales plans, strategies, growth targets, investment plans and/or talent acquisition. While each industry has its particular risks, in this book, the author describes the essential elements that any effective ethics and compliance program should contain.

This book is a source of information that connects yesterday with today. The author shares observations and lessons of the past to suggest corporate leaders implement effective ethics and compliance programs to protect their organizations and themselves. The book covers theories of ethics but with an eye focused on practical application. Risks, ethics, and compliance are analyzed with an overall vision, connected to the reality of business life, without getting bogged down in abstract thinking or in technical and regulatory details.

Ethics and compliance are disciplines that have increasingly achieved greater recognition in organizations. Thus, due to the importance of risk management in the business world and the necessary involvement of the CEO and the board of directors, it seems appropriate that executives get access to a book about risks, ethics, compliance and human resources directed not only to compliance experts but also to any organizational leader.

This book is a wake-up call that allows business leaders to understand the benefits of implementing an effective ethics and compliance program that will help members of organizations to make the right decisions and act within the law. If they do, they can better prevent and react to the difficult obstacle course of risks, dangers and threats that organizations face and that may jeopardize the sustainability, resilience, and survival of companies.

Section 1

Culture

1

Ethics and Values

1.1 Ethics and Moral Conscience

For the Greek philosophers, wisdom was the search for knowledge. They reflected on the causes of things to explain the different phenomena of reality, such as the origin of the universe, the meaning of life, and the pursuit of truth.^*

* The word philosophy comes from Greek and is composed of the words filos (love) and sophia (wisdom). Philosophy means “love of wisdom” and the invention of the term is attributed to the Greek mathematician and philosopher Pythagoras (569–475 BC) around the year 530 BC. Pythagoras was considered wise but replied that he was not wise, but rather someone who aspired to be wise.

In the West, Thales of Miletus (625–547 BC) was the first philosopher. Thales is recognized as the first person in the Western world who attempted a rational and logical explanation to the different phenomena of the world, leaving aside mythical and supernatural explanations.^† That is why it is said that Thales passed from the “myth” to the “logos,” which is the use of “reason.”^‡

† One night while watching the stars, Thales fell into a well and excused himself by saying that his eagerness to know the things of heaven made the things under his feet not be seen.

‡ After Thales there were many great philosophers in Greece, such as Pythagoras, Anaximander, Anaximenes, Heraclitus, Socrates, Plato, and Aristotle.

Eastern philosophy, meanwhile, emerged more or less at the same time. There are certain similarities between the two cultures as both pursue the desire of man to question the existence and the things around him.

In China, it is said that Confucius (551–479 BC) was the first philosopher. Confucius (Kung Fu Tzu) was a Chinese thinker who regretted the disorder, degeneration, decadence, and lack of moral standards of his time. Confucius said: “The rulers can only be great if they lead exemplary lives and are guided by moral principles. If the prince is virtuous the people will imitate his example. Being ethical is the ultimate goal.”^§

§ “Pact with the Devil,” Interview with Peter Koestenbaum. Emeritus Professor of Philosophy at San Jose State University, California, Management (November–December, 1999): 131.

The Tirukkural or Thirukkural is a classic Tamil text^* consisting of 1,330 couplets dealing with the virtues of an individual. It is considered one of the greatest works ever written in ancient times on ethics and morality.^†

* The Tamils are an ethnic group native to the state of Tamil Nadu, in India, and the northeastern region of Sri Lanka. They speak mainly the Tamil language, and its history goes back two millennia ago. At present, its total number is 77 million people. es.wikipedia.org/wiki/Tamil_ (pueblo).

† The Tirukkural is divided into three volumes, it has 38 chapters. It was authored by the poet and philosopher Valluvar around the year 300 BC.

Philosophy is divided into different branches to respond to specific problems. Ethics is a branch of philosophy that reflects on and judges human behavior and values that apply to decision-makers. Ethics is the branch of philosophy that focuses on moral issues, in what is right and what is wrong.

The word ethics comes from the Greek ethos meaning behavior. For Aristotle (384–322 BC) ethos was the habit, character, mode of being, personality, or identity of the person derived from his way of behaving according to customs.^‡

‡ “Ethos,” Wikipedia.

Ethics analyzes acts performed by a man and makes a judgment about them to determine whether an act or behavior has been ethically good or bad, right or wrong. Acting with ethics implies the requirement of complying with values.

Ethics helps us to reflect on the behavior of the human being and to determine if we have acted with integrity or not. Ethics focuses on behavior and asks what behavior is good or bad.^§

§ British philosopher George Edward Moore (1873–1958) has written in his book Principia Ethica (1903) that the fundamental question of ethics is how to define “good.” For Moore, it is impossible to define good and any definition of good is fallacious. es.wikipedia.org/wiki/George_Edward_Moore.

The Spanish philosopher Adela Cortina says that “ethics task … is to show us how to deliberate well with the aim of making good choices.”^¶

¶ Adela Cortina, Business Ethics (Editorial Trotta), 18.

Fernando Savater, Spanish philosopher and intellectual, in his book Ethics for Amador^** defines ethics as “the art of discerning what is good and what is bad.”

** Ariel, 2014.

Organizational ethics expert and professor at the University of San Francisco, Marvin T. Brown, has said, “Although it may seem strange, the purpose of ethics is not that people are more ethical, but that they are able to make better decisions. Ethics is the process of deciding what to do.”^††

†† Adela Cortina, Business Ethics (Editorial Trotta), 86.

Individuals with their actions in the world of being may conflict with the world of what should be, the world of rules, norms, and consensus, i.e., the world of morality.

The word moral comes from Latin “mos” and its plural “moris” and means custom.^* Morality is a set of customs and norms that are considered good in directing the behavior of people. Conduct is moral when aligned with customs and accepted standards.

* It was the philosopher Marco Tulio Cicero (106–43 BC) who took the adjective ethicós, referring to custom, and coined the term moralis, from which derived moral, download.com/ethos/.

While morality refers to the prescriptive and normative, to what should be; ethics refers to the descriptive, to what it is.

Ethics reflects wonders and judges whether an action or behavior is moral or immoral; that is if that action (what it is) is aligned to what should be according to rules, norms, values, or moral consensus.

Business Ethics is a branch of ethics that examines the ethical principles, standards, and set of values that govern the business behavior of an individual and also the ethical problems that arise in a business environment.

Ethics lawyer Michael Josephson has said that “ethics is a moral perspective that asks you to judge your conduct in terms of what is right or wrong, what’s decent, what’s good, what’s honest.”^†

† Linda Trevino and Katherine Nelson, Managing Business Ethics, 5th ed (John Wiley & Sons, Inc. 2011), 346; Josephson, Ethics in a Legalistic Society, Exchange (Fall 1989), 3–7.

The French thinker Alexis de Tocqueville (1805–1859) traveled in 1831 to the United States for two years to study for the country’s prison system. Tocqueville said: “Humankind feels permanent and general needs that have given rise to moral laws.”^‡

‡ Alexis de Tocqueville, Democracy in America (Folio), 206–07.

Some authors do not distinguish between morals and ethics and use the terms synonymously. Ayn Rand (1905–1982) was born in the Russian Empire and is the author of bestseller Atlas Shrugged.^§ In a work called “Ethics in our time” presented in 1961 at the University of Wisconsin, Rand said, “What is morality or ethics? It is a code of values that guide the actions and choices of men.”

§ In the eighties, the Library of Congress conducted a survey asking what book had greater influence in the lives of the respondents. First in the ranking was the Bible; second was Atlas Shrugged.

And what is the role of conscience? According to the mythological legend of the “Ring of Gyges” mentioned by the philosopher Plato (427–347 BC) in the Republic, people would be unjust if they could be invisible to the laws.^¶

¶ Gyges was a shepherd who found a gold ring and decided to keep it. When Gyges found that the ring had magical properties – when he gave the ring a few turns, it turned him invisible – he used the ring to kill the king and take over his kingdom.

Savater has said that “human beings do all the evil they let us do.”^*

* International Book Fair of Guadalajara in Mexico, November 29, 2011 http://cultura.elpais.com.

Is it really so? Would you behave well yourself or would you engage in improper behavior if you couldn’t get caught?

The ethical conscience in decision-making has been the object of analysis by different thinkers throughout history. You can read the thought of some of them in the footnote.^†

† The Greek tragic poet Sophocles (496–406 BC) said: “There is no witness more terrible or prosecutor more powerful than the conscience.”
Roman politician and philosopher Marcus Tullius Cicero (106–43 BC) said that “my conscience has more weight for me than the opinion of everyone.”
The Liberator of Argentina, Chile, and Peru, Jose Francisco de San Martin (1778–1850) stated that “conscience is the best judge of a good man.”
Socrates (470–399 BC) said: “There is no better pillow than sleeping on a clean conscience.”

Every day, every hour, we choose how to act. In ethical behavior, conscience is like an invisible hand that leads us to decide what to choose, it is a voice that speaks to us and tells us what ...

Table of contents

• Cover
• Half-Title
• Title
• Copyright
• Contents
• Acknowledgments
• About the Author
• Introduction
• SECTION 1 Culture
• SECTION 2 Change
• SECTION 3 Risks
• SECTION 4 Control
• Conclusions
• Index