chapter  11
38 Pages

Choosing and Implementing Standards

Developing an ethical framework forms the central foundation of the company’s risk management program. A strong program of knowledge and risk management (KRM) helps to identify, manage, and if done well, prevent unethical or illegal behavior in an organization. However, as with the accounting practices, a standardized set of rules concerning specific behavior and company performance and how to account for and report on that behavior and performance is necessary in order to provide the company, its investors, and regulators with reliable information from which to judge a company’s future success. In short, an ethical framework is essential to set forth a company’s principles but alone will not provide the necessary level of detail for behavior guidelines at an operational level. The next step is to make that ethical behavior objective, verifiable, and reportable. This is best done through a combined application of standards-based performance measurement and reporting.