Ethical risk assessment
Basically, investors, management and public in whole have become increasingly interested in examining the ethical performance and risk of company’s operational activities. This process is enhanced through updated U.S sentencing guidelines and the Department of Justice principles of prosecution (Godara & Varuna P.37). The essence behind evaluating such performance risks is to curb high cost that would otherwise be unable to amend in terms of finance and image once happened. According to Godara & Varuna (P.35-37), in developing a tool to perform this risk assessment, two existing measures that are found missing are looked at they include; Global Reporting Initiative and Ethics Resource Centre Ethics Quick Test.
The first one is Global Reporting Initiative and Ethics Resource Centre Ethics Quick Test. The first case is concerned with the social performance of companies and more specifically, their multicultural codes and standards in the past. On the other hand, Ethics Quick Test broadly tests on organization’s commitment to ethics and how they factor out to the following areas; values, strategies, goals, objectives, policies and procedures (Godara & Varuna P.39). However, the greatest downfall of this test is that it considers dynamics as risk factors without actually going to industrial and individual levels. A tool for addressing ethical risks factors allows companies to compute ethical risks on the basis of indentified factors weighted for importance.
At industrial levels, the tool risks helps to answer the following questions; how intense is the competition and how customers are large (Stegmann, P.21). Consequently, the more the intense the completion and the large the customers are the higher the risks. At company level, Stegmann outlines three aspects that are taken into account; strategy, culture and ethics systems. However, the more the company is hierarchical and the more the dealings are the higher the risks. Some of the questions in company level are, how companies are serious about ethical conduct and whether the leaders approachable. Finally, the questions posed at individual level are whether the employee’s assistance program is effective and if the program credibly emphasizes on each employee’s business. According to Stegmann (P.23), this is collectively done for the purpose of business research ethics evaluation.