Risk monitoring and mitigation
In a scenario of constant changes and increasing complexity in risk management and national and international regulations, having tools that allow the assessment and mitigation of noncompliance risks and fraud, and the continual monitoring of misconduct events is becoming increasingly more necessary.
- The three detection sides of a channel
- Advantages of having an independent whistleblowing channel
- Deloitte’s Expertise
- Our solutions
The increase of national and international regulations and the need for the effective monitoring of the exposure to noncompliance and business risks requires adopting tools that allow the continual monitoring of misconduct events and the noncompliance to prevailing standards and regulations.
The current Brazilian scenario poses a major compliance challenge, i.e., the increased obligation for organizations to be compliant. In the case of corruption, the Brazilian law establishes a fine of up to 20 percent of gross annual revenue or, in some cases, up to R$60 million for organizations that fail to comply with the Anticorruption Law. This in addition to, of course, civil penalties imposed on those responsible for the organization.
With regard to misconduct, any practices in violation of the Ministry of Labor’s rules could also result in hefty fines.
The three detection sides of a channel
Organizations that have a properly structured Whistleblowing Channel:
- Incurr losses due to fraud 59 percent lower on average than organizations that do not have a whistleblowing channel in place;
- Endure fraud for seven months less on average than organizations that do not have a whistleblowing channel in place.
Compliance with regulations
Several sectorial regulations require the implementation and adequate operation of a whistleblowing channel, such as Central Bank of Brazil (BACEN) Resolution 3456, State Companies Law (Law 13303), and the New Brazilian Corporate Governance Code - Public Companies. In addition, Article 7 of the Anticorruption Law includes some additional considerations on mitigating penalties, including:
"The existence of organization-wide integrity, audit and whistleblowing incentive tools and procedures and the effective enforcement of codes of ethics and professional conduct".
Misconduct and People Management-related Issues
Public Labor Prosecution Office’s actions against organizations usually refer to:
- Psychological harassment and discrimination;
- Working hours in excess of the statutory limit;
- Nonpayment of overtime;
- Unsafe working conditions;
- Nonuse of personal protection equipment (PPE) in dangerous working environments;
- Noncompliance with disabled workers’ quotas;
- Failures in labor outsourcing.
Advantages of having an independent whistleblowing channel
- A whistleblowing channel potentially reduces penalties and fines, thus contributing to the improvement of an organization’s financial health and organizational climate. It is an effective tool to detect corruption, fraud, misconduct, and unethical behavior.
- In an environment where the fear of retaliation is the main reason for not reporting unethical conduct within an organization, an appropriate communication plan, underpinning the goal of the whistleblowing channel and its operation model (operated independently by a firm specialized in risk and fraud management) contributes to engaging employees.
Structuring and implementing the whistleblowing channel
Deloitte applies tools, techniques, and methodologies to ensure that relevant information is obtained to make the necessary arrangements and investigations, ensuring the anonymity of the whistleblower, impartiality toward the organization, and the whistleblowing channel’s confidentiality.
- Technology architecture designed to ensure the operation’s high availability, security, integrity, and continuity;
- Fully computerized call center, with a high level of registration security and quality.
Information technology and security
- Carefully selected employees, continuously trained on service standards, applicable national and international laws and regulations, and safe procedures to handle and address confidential information;
- Service governance aligned with national and international laws and regulations related to whistleblowing channels.
Confidentiality, privacy and compliance
- Whistleblowing Channel service provided in a separate environment, inside Deloitte’s premises, with restricted access, monitored by cameras 24/7;
- Service points structured according to ABNT NR 17.