Week 7- Whistle-blowing in ERM In the Chessfield case, a whistleblower uncovered some wrongdoing at the company, including high CEO compensation and excessive risk-taking practices. It is a common p

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Post 1:

Hi all,

In companies the whistleblowers reveal the information about company fraud activities and organizational illegal and unethical actions to outside people. In organizations the Whistle-blowing is important for detection of company fraud events and investigation of company fraud and illegal events. The Whistle-blowing is part of enterprise risk management and companies required to include the Whistle-blowing process in enterprise risk management plan. Because the fraud and illegal events are risks in business operations and by detection and resolve of fraud events need to use the Whistle-blowing in enterprise risk management plan.

The Chess field case this company does not handle the all types of business risks and if any frauds occurred in company not possible to identify and trace the illegal activities details due to loss of efficiency of internal controls. So the Chessfield company include the Whistle-blowing in ERM plan and improve the risk handling process and avoid the illegal events and fraud events risks in companies.

The Whistle-blowing having advantages and drawbacks. The Whistle-blowing advantages are in companies the employee and company management unethical events and fraud events are revealed to others by Whistle-blowing and the legal protection is increased with Whistle-blowing process. If any frauds and illegal events occurred in company using Whistle-blowing easy to track the illegal events details (Gerald Hanks, 2018).

The drawback of Whistle-blowing is the employees in Whistle-blowing career is diminished and the other people may be career harm to Whistle-blowing employees and whistleblowers career is lost due to reveal of the high-level frauds in company (Gerald Hanks, 2018).

References

Gerald Hanks. (2018). Advantages & Disadvantages of Whistle-Blowing. Available at:https://bizfluent.com/info-8153422-negative-consequences-whistleblowing.html.

Post 2:

The whistle-blowing will raise the issues, and the issues will be reported to the right people with the right authority. The hotline appears to have harmed the company, which saw its share price decrease by over a third after the shareholder complaint was submitted. The company is believed to have investigated the matter internally, and is believed to have concluded there is no issue, but a more rigorous compliance approach is required. The problem with whistle-blowers is that they are often arrested as a result of their reporting. After being arrested, the whistle-blower is immediately labeled a hacker, which can also attract hacktivist groups and detainment, interrogation, and sometimes even imprisonment (Cordis & Lambert, 2017).

A whistle-blowing policy should state clearly that whistle-blowing is also an ethical activity. However, the whistle-blower recently quit the company and was about to go public with her revelations, the newspaper said. While many whistle-blowers at Petrobras are angry about the revelations about impropriety, many executives feel bad about allowing their companies to run away with money and be unable to reveal anything. This type of arbitration clause and the employee's right to initiate it ensures that employees can be protected from retaliation and that other employees are not subjected to the same risk (Cordis & Lambert, 2017). In contrast to a classic lawsuit where both sides have the right to be heard, the corporate defense team is usually appointed by the owner. This adds to the employee's burden as the manager must defend the company against adverse claims.

The whistle-blower then is responsible for building evidence to support their claims, often through accessing documents and interviewing current employees. This is done to prevent senior management from hiding problems. However, it was found that the internal investigation department did not provide any whistle-blower protection for this hotline. The company did not have a written procedure for investigating complaints by external whistle-blowers. No proper procedures were prepared to cover both internal investigations, and those complaints. However, the owner of the whistle-blower was contacted by a different company through the hotline. Instead of launching an internal investigation, he fired the whistle-blower. Since the whistle-blowing process was informal, there was no proof that the whistle-blower was fired, but the owners feared reprisal if they made the whistle-blower an offer (Givati, 2016).

References

Cordis, A. S., & Lambert, E. M. (2017, December). Whistle-blower laws and corporate fraud: Evidence from the United States. In Accounting Forum (Vol. 41, No. 4, pp. 289-299). No longer published by Elsevier.

Givati, Y. (2016). A theory of whistle-blower rewards. The Journal of Legal Studies, 45(1), 43-72.