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Grow Employee Engagement with a Strong Investigation Process

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In a tight labor market, employers are seeking to gain or retain a workforce with more pay, work for home and other perks. They can also improve retention through a culture of trust and consideration. Improve how you listen and investigate when someone on your team speaks up about compliance. If you investigate with urgency and respond, then you’ll gain trust and build employee engagement.

Here is an anecdotal case, from the perspective of the business: An anonymous report comes in from a small foreign office, that says “It seems like there is something going on between the marketing lead and a partner. I suspect they are wasting marketing funds.” The seriousness of the issue is not entirely clear—maybe the person reporting the issue is questioning the quality of the marketing campaigns. It is a challenge to reach people overseas.  Some initial questions are asked, but the case sits for months before anyone starts reviewing the matter closely. 

After almost a dozen interviews, no one reveals anything useful. The answer has to be found by sifting through years of email. The investigation ultimately uncovers how the company is being taken advantage of. It is shocking how so many people in the office know the marketing lead is stealing company funds, but said nothing. 

After the late start, combined with actual wrong-doing that is festering, the person who reported the wrongdoing and the rest of the office have stopped caring. The business is left with a problem infecting the whole office, instead of having to deal with only one or two bad actors.

Compliance is a Retention Issue

A compliance report may raise questions about potentially uncomfortable topics: harassment, fraud, conflicts of interest or any number of issues highlighted in a typical code of conduct. When a report is substantiated, someone might be disciplined or fired—thus, colleagues may view the person who reported the issue as disloyal to the team. Those who come forward may also fear that their company may not care about the reported issue or try to cover it up, and maybe even retaliate against them.

With the risks reporting presents, it is likely to be the most engaged, loyal employees who report, so you risk losing your best if you fail to listen. This happens when you leave reported issues unaddressed, where you fail to rectify a substantiated report or when you let a report languish unresolved. But if you follow up and respond quickly, you will win trust. When a talented employee feels listened to, they will have higher morale, trust the boss more and be more committed.

Improving Investigations

Listening to a compliance reporter is about taking the issue seriously and expediciously running it to ground. The foreign office scenario above would have gone better had the investigators seen through the vagueness of the report to the potential seriousness of the underlying misconduct and then doggedly pursued a resolution from the start. With those in the office uncooperative in interviews, having access to past email made it possible for the investigation team to close the case.  

Here are five tips to improve and speed up how you investigate:

  1. Have a process: Implement a disciplined approach for following the routine steps in a compliance investigation—assessing the initial report; developing an investigation plan; finding, verifying and analyzing to formulate a decision; and resolving with discipline, prevention, and training.
  2. Be selective when choosing your investigators: Staff your investigative team with individuals who are not wired to let cases sit. Provide them investigation training and consider augmenting with outsourced external investigators if an issue is large or complex.
  3. Define objectives: Set a clear objective for the investigation at the outset to keep investigators on track. The investigation can move on when they have obtained sufficient facts about the objective—finding that “smoking gun” email, for example. When you learn something new that needs further review, flag it for later but do not let it interfere with your first objective.
  4. Use technology: Give your investigators direct access to the data. It is frustrating for an investigator to receive a report and then have to wait for IT to provide the relevant emails or other data, then wait for IT to provide additional materials when the investigator learnes something new. The team’s investigation times accelerate when it has direct access to email and other communications through archiving platforms and other technology.
  5. Track timing: The time to complete an investigation is dependent on the circumstances. The investigation team should set period of time to resolve the investigation when a compliance issue arises.

A business builds a strong culture when it supports those who speak up. Having a strong investigative team, defining objectives, using technology and being aware of completion timing will allow you to quickly learn what is going on. You will also demonstrate that you are not using a haphazard approach.  This will give your employees more confidence in your company and encourage them to stay around.

RIMS ERM Conference 2021: Integrating Net Zero Commitments into ERM Plans

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In a session titled “Integrating Net Zero Commitments into ERM Plans” at the RIMS ERM Conference 2021, Michelle Tuveson, executive director of the Cambridge Centre for Risk Studies, led an interactive session focused on how risk managers were handling their companies’ emission reduction pledges and efforts. Tuveson told the audience that while one-third of companies in G20 countries had signed onto “net zero” commitments—promises to eventually eliminate their companies’ carbon emissions completely—it is unclear how much analysis went into these pledges. As countries around the world start to require emission reporting, this lack of analysis (plus a lack of data to assess progress) is a major concern for these companies’ risk managers.

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The audience seemed to back up this assertion.

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Tuveson conducted a live poll, which revealed that most attendees felt that their industries were on the less prepared side for net zero developments and that their ERM and net zero plans were not very integrated. When asked which group was most driving their companies’ climate action, most answered that it was investors/rating agencies (31%), followed by the board and executive management (20%), consumers (17%), and peer companies (11%).

Tuveson was joined by Joerg Osterloh, director of enterprise risk management at Coca-Cola Europacific Partners, who outlined the company’s net zero activities.

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With a commitment to be net zero by 2040, it had already reduced emissions across the company by 30% by 2019. The company was prioritizing this effort partially because it saw climate change risks “front and center,” impacting all aspects of its supply chain.

Osterloh credited a strategy that included analyzing how much emissions each sector of the company’s business produced, then strategically addressing each. For Coca-Cola Europacific Partners, the most emissions came from drink packaging, which was not as easy to reduce as other categories like operations and supply cooling. Overall, Osterloh noted the importance of being fully transparent in the company’s net zero activities and its advocacy to influence public policy on transitioning to a low carbon future. He also stressed investing now in new technologies, rather than waiting for those technologies to mature.

At least some risk managers and their companies may already be following this advice. In a final poll, most audience members said that the focus of their companies’ net zero strategy was substituting renewable power (26%), followed by greening supply chains (19%), adopting new technologies (18%), altering products and services (15%), and purchasing carbon offsets (9%).

If you missed this session, it and many of the other sessions at RIMS ERM Conference 2021 can be viewed on-demand online.

Mitigating Construction Risks with Advanced Training Techniques

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Construction is consistently ranked as one of the riskiest jobs in the United States. Fluid workforces, high-risk scenarios and a communication disconnect between home office and front-line workers all result in the very real possibility of serious injury or even death.

One of the major challenges in the construction industry is getting information and training to the front-line workers who face the most risk, but are often the least informed. Company emails and company-issued phones go as far as the foremen but do not always make it down to the crew themselves. Training is not always readily available or is more compliance-based than it is practical for the day’s work. This creates major risks for front-line workers, contractors, insurers and anyone involved with ensuring construction projects are safely and accurately completed. As a result, the construction industry is increasingly turning to new virtual and mobile technology tools. In an effort to improve its communication and training practices and provide critical information to its workers.

Visualizing High-Risk Scenarios

New, interactive modules are allowing safety teams to offer more effective and engaging job-site training in the form of videos, quizzes, virtual reality and 3D simulators. Exposure-based training platforms can also provide a “hands-on” experience, giving front-line workers the opportunity to encounter different situations while in a safe environment.

For example, a 3D simulation of a “hazard hunt” tests workers by having them identify all of the potential hazards on a building such as tilt, unsafe conditions and proximity to power lines and how to mitigate those risks. Fire safety prevention can be made into an immersive experience to help a worker identify the proper fire extinguisher based on the simulated fire, increasing the likelihood that they will make the right choice in the event of an emergency.

Simulations can also take tradesmen step-by-step through the process of working on specific tasks, allowing them to learn the process from start to finish and monitoring for the most common risk exposures. To become a signalman when working with cranes, the current process is to watch videos and memorize the hand motions. With simulators, workers can now be put into specific scenarios and learn how to proceed in the safest way and without endangering the person or equipment. Ultimately, new exposure-based training helps workers overcome any natural inclinations that put them in harm’s way and increases their awareness of all the risks of a specific task or job site.

Facilitating Effective Communication

Construction workers may be on a site for three months, or they might work on a job for one day. In both cases, contractors take on the same level of risk when it comes to ensuring each employee is appropriately trained. And with a workforce that is constantly in motion, construction managers face the challenge of tracking who has been trained on what. Paper filing systems and limited access to the training records while onsite can lead to oversights when it comes to identifying improperly trained workers.

Virtual training allows contractors to more easily track exactly who is trained on what, and store the important documents in a digital archive. By keeping critical information readily available digitally, onsite managers can more quickly confirm and step in if someone is not properly trained and manage overall communication for the duration of the project even as the job site’s workforce changes.    

Builders are also using digital communication platforms to address the communication disconnect between the home office and the front-line workforce, and in order to reduce the risk of miscommunication. These apps allow teams to send messages, emergency alerts and even just-in-time training videos that can highlight safety hazards specific to the job site to individuals or entire crews in an instant, helping to reduce unnecessary work stoppages and operational friction. They can also deliver micro-training refresher courses so that workers can better retain and implement the new knowledge and skills they have learned.

By deploying new types of digital training techniques, companies can improve communication and provide the front-line workforce with the right information to make safe decisions on a job site, reducing overall risk and most importantly, ensuring that their workers get home safely.

The Risky ‘Business of Art’ Explored at Observer Event

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From left: Massimo Sterpi, Elena Zavelev, Anne Bracegirdle, Devin Finzer, Curt Bilby / Photo: Keith Sherman & Associates

NEW YORK—On May 21, the Observer’s inaugural “Business of Art Observed” event brought experts in art, insurance, risk management, tech and finance to the Roosevelt Hotel to discuss established and emerging risks facing the $50 billion art industry.

The “Insurance and Risk Management” session wasted no time exploring creative risk and claims management approaches to the various forms of potential damage to artwork. From transit to security to geopolitical risk, panelists agreed fine art coverage is not a paint-by-numbers process, and said the “framing of a claim” can facilitate a payment.

“Insurance companies get a bad reputation,” said Mary Pontillo, senior vice president and national fine art practice leader at DeWitt Stern. “But the higher-end, really good-quality insurance companies are looking for ways to pay claims. I think that’s where there are a lot of misconceptions.”

For example, she mentioned advising a client whose work was being kept on a yacht. While certain maritime and environmental risks such as humidity were not covered by the policy, she was able to demonstrate that ocean spray had been the source of the damage and successfully get the claim covered.

The session discussed modernizing risk management in the art market and how the industry should apply forensic due diligence to transactions and ensure they view all business activities through a lens of strategic risk. And with transparency cited as a continuous challenge, Dennis Wade, a senior partner at Wade Clark Mulcahy, LLP, who has handled international fine art matters, pointed out the importance of reputation risk when drafting a policy.

“Many policies also contain an exclusion for the dishonesty of the person to whom you deliver or entrust the goods,” Wade said. “So if you consign a work to a corrupt gallerist, there may be an exclusion in your policy and you may not be covered at all.”

The emergence of blockchain technology dominated discussion at another session, “Art Market 2.0: Using Art & Technology to Drive the Industry Forward.” According to panelists, authentication and secure transactions have risen to the top of their risk registers. New Art Academy Founder Elena Zavelev said blockchain’s ability to put individual faces on digital artwork has mostly solved the prior risk of unauthorized duplications, forgeries, and fraud. Zavelev and her co-panelists said blockchain may facilitate a long-term change in the way art is created, sold, curated and insured by improving the ability to track a work’s provenance.

Christie’s AVP Anne Bracegirdle said the masterstroke for streamlining the authentication process is to create a digital, industry-wide registry. Tokenizing original works, she said, would simplify the experience of buying, selling and trading. “If each piece had its own digital identity that would stay the same, no matter where it went, it would instantly provide secure provenance and prices,” Bracegirdle said. “There are companies like Consensus and Microsoft working to create distributed identity networks. The security within that could be applied to scale blockchain—regardless of which blockchain you’re interacting with. Digital identities would provide clients with access to all their consignments and their purchases in one consolidated space, which currently doesn’t exist.”

The evolution of art was also a hot topic during this session since what’s considered a “finished piece” is no longer just a physical canvas. Digital, virtual and even crypto-art may be in their relative infancy but these are gaining global popularity and could significantly influence the industry, said Devin Finzer, co-founder and CEO of OpenSea, a peer-to-peer marketplace for crypto collectibles, gaming items, and digital art.   

“[Owning digital products] has always been confined to a specific ecosystem, like event tickets to a ticketing site,” Finzer said. “Blockchain offers a new type of ownership for these digital assets and it’s exciting for digital art because you can own it in a variety of [digital forms]. Right now, we see the enthusiasm is from tech enthusiasts, but I think over time these ideas around digital ownership will cross over to a mainstream crowd who appreciate the art more than the technology.”