Essential Elements of an Effective Whistleblower Hotline and Reporting Program

The Whistleblower Programs, established by regulators like the Securities and Exchange Commission (the “SEC”) in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 that provides monetary incentives to people who report possible violations of the federal securities laws to the SEC, have made it is essential for organizations to implement an effective internal hotline program and incentivize employees to use that hotline.

When the whistleblower first reports internally rather than to the regulators, the company gets the opportunity to take corrective and preventative actions to the conduct or activity before it becomes unlawful, or else the company is required to report it to regulators. Internal reporting saves organizations from the loss of productivity and reputation. The proactive approach also saves organizations from the costs associated with investigation(s) and remediation(s) of the fraudulent acts.

In order to ensure that a whistleblower first reports internally rather than approaching a regulator- such as the SEC, the organization need to implement an effective hotline reporting program. The essential elements of an effective whistleblower hotline and reporting program are as follows:

• Anonymity and confidentiality– Research Indicates that employees are more content in reporting suspected wrongdoings when the option of anonymity and confidentiality are available. It helps nurture a climate whereby employees are more likely to report wrongdoings without fear of retribution.
• Managed by third-party provider- Whistleblower hotlines managed by independent third-party providers are trusted more by employees as compared to the internally managed hotlines.
• Single Hotline- Irrespective of the mediums employed (e.g. email, telephone etc.) having a single point of contact as a general ethics and compliance hotline allows companies to create awareness and promote the hotline more effectively and get an increased response from employees.
• Whistleblower incentives-Employees are more likely to report misconduct in a culture that respect individuals, processes and company values by consistently acknowledging and rewarding ethical behavior. Therefore companies should offer financial as well as non-financial reporting incentives for whistleblower reports that save the company from unethical or unlawful activity.
• Allow multiple methods for coming forward- Employees differ on their preferred method of reporting, therefore encourage all employees to report misconduct before the company faces any financial or reputational consequences by giving them a number of options to communicate their concerns e.g. via email, in person, telephone, dropping a brief memo in a drop box at the reception etc.

Predict360’s Anonymous Hotline Reporting / Whistle Blower Software provides prompt and valuable insight into potential risks and danger of violations of policies, procedures, and controls that result in noncompliance and that can impact a company’s profits and reputation.

How can we help?

360factors, Inc. is an Enterprise Risk and Compliance Management Technology and Services Company that helps companies improve business performance by reducing risk and ensuring compliance.  Predict360, its flagship software product, vertically integrates all risk, compliance and operational functions allowing companies of all sizes to successfully utilize its anonymous hotline reporting software and manage regulations and requirements, policies and procedures, risks and controls, audit and inspections, and on-line training and qualifications, in a single cloud-based platform.

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