Global M&A trends and risks
Powerful new forces shaping in the M&A landscape
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Global | Publication | December 2016
Corporations carrying on business are exposed to two broad types of risk arising from the conduct of employees:
The first type of conduct covers actions by a bad or rogue employee - fraud or embezzlement, through to misuse of confidential information and illegitimate competitive activities.
The traditional method for addressing the risks posed by such conduct involves the following:
The method exists largely to enable recourse against the bad or rogue employee after the impugned conduct has occurred.
The second kind of conduct does not necessarily spring from bad motives on the part of employees. What we are talking about here are actions that might be said to amount to sexual harassment, bullying, discrimination or the creation of safety risks which expose the employer to liability under statute. So, for example, conduct by one employee against another that answers the legal definition of sexual harassment will be sheeted home to the employer under the Federal Sex Discrimination Act if the conduct is connected with work and if the employer cannot show that it took all reasonable steps to prevent the conduct. By way of further example, the inadvertent actions of an employee can give rise to risks to health and safety which result in the employer being in breach of the primary duty under WHS legislation.
Because the risks posed by the second type of employee conduct are more diverse and not tied to any notion of motive/intention on the part of the employee, the risk management strategies that must be adopted by employers in this area need to have the following characteristics:
It is readily apparent that those characteristics are not focussed on punishing behaviour after the event, but on creating a way of doing things at the workplace (a “culture”, as it were) that stops the risk from materialising into a problematic event.
This raises the question of whether a pro-active and broad-based risk management system ought to be applied in relation to the potential risks of intentional conduct by “bad” or “rogue” employees as an adjunct to the traditional “punish after the event” approach.
This idea is at the centre of our recent Risk Ready workshops. Stay tuned for further articles in which we explore the issues raised in those workshops.
Nina Varumo is a freelance portrait and documentary photographer based in Stockholm. A recent project of hers Kvinnor till sjöss (‘Women at sea’) is on ongoing photo series highlighting the working life of female seafarers in order to change the stereotypical image of what and who is a seafarer.
Companies have been publicly reporting on their financial performance for over a hundred years. However, they are increasingly having to make public non-financial disclosures relating to sustainability and environmental, social and governance (ESG) matters as a result of rules, laws and regulations issued by stock exchanges, governments and regulators worldwide.
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