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You do not have to wait for an ESG management standard before you start managing your ESG obligations. Obligations associated with Environmental Social Governance (ESG) initiatives can cross and overlap several compliance domains. While standards are being developed unique to ESG with respect to reporting requirements the management of the obligations themselves does not yet have a standard management approach. For the foreseeable future, deciding where ESG obligations should be managed within an organization and how best to manage them will be largely shaped by the scope and nature of the ESG obligations and the existence of other compliance programs. For example, organizations that already have EHS programs could incorporate them into those frameworks. You can use ISO 14001 and replace "Environmental" with "ESG" to provide the basics to start moving towards managed ESG. Other standards that might be helpful to get started: ISO 37301 - Compliance Management System Standard ISO 26000 - Social Responsibility (CSR) Management System Standard Most of these follow a similar framework which can be adapted to include aspects unique to ESG.

As the year comes to a close we identified 10 compliance priorities for 2023 to keep you between the lines and ahead of risk. You can download the presentation here .

In my first year of engineering I was given this advice. You can be the smartest engineer but if you cannot articulate your ideas and communicate them then it will not matter. Many engineers tend towards introversion (myself included) which means that learning to communicate requires overcoming fears in the presence of uncertain reactions. Recognizing that not all work environments are "safe" and even for those that are there will always be for many the fear of failure and what others might say. This is where courage comes in – acting in the presence of fear or uncertainty. Taking risks (calculated or not) has always required courage. It may work out or it may not. You may shipwreck your career or send it to the moon. However, what is worse is living under fear and regret – wondering what if. We need to also remember that fear itself is not a bad thing. We should fear what is dangerous. However, our fears can be misaligned. When it comes to communicating, we need to fear the risk associated with keeping silent more than the risk of speaking up. In the upcoming year, may we all find the courage to face our fears and the knowledge to know what not to fear.

Those that have watched Ted Lasso on Apple TV+ will know that the meaning of words we use can be different specifically when spoken in another culture. In the TV show, an American football coach goes over to the UK to coach a football team (and by football we mean soccer) where he soon discovers that some words, phrases, and idioms do not mean the same thing. For example, in American football, players train whereas in the UK footballers practice. The words train and practice are used for the same thing and will involve both training and practice. Confusing, right? This confusion also exists when it comes to business when we hear the word training. In this context, we usually expect to learn how to do something rather than actually doing it. Practice is the word we use to describe applying what you learned which takes more time and often done separately. This separation between training and practise perhaps can be attributed to our education system which tends to separate knowledge from skill development. What about LEAN? When it comes to LEAN, training and practice are done together more like a sports team. You learn by doing and you learn with a coach. This is often done in the context of problem-based learning where you learn what you need to solve a problem when the problem surfaces. Toyota Kata is an excellent example of how this is done. LEAN has successfully used this approach for years along with other sectors such as medicine where problem-based learning is seen as the best way for future doctors to learn their trade. What about Compliance? When it comes to compliance, training is a big thing. In fact, training for many organizations is seen as the dominate means to achieve compliance apart from audits. However, training in this case has more to do with education rather than developing skills. Receiving training about compliance while important is ineffective without practicing the skills needed to achieve compliance and that has more to do with keeping promises. According to Promise Theory (c.f. Mark Burgess), obligations are the intentions induced by someone on us with a penalty for non-compliance. Promises (the other side of the coin) are the commitments we voluntarily make to meet the obligation. You could say (and I do) that the practice of promise keeping is the true work of compliance. To that end, here are seven things you can practice to help you keep your promises: Be intentional - keep track of your promises and how well you are doing. Become more self-aware - monitor your decisions and be aware of what you are committing to. Don’t make promises you can’t keep - over promising and under delivering is still a thing. Make realistic commitments based on on your capabilities, capacity, and availability. Be courageous - making promises is a courageous act often done in the presence of uncertainty. Press into the uncertainty and learn how to contend with it rather than withdrawing from it. Be proactive - assess the risks in keeping your promises and make plans to improve your probability of success. Ask your team to help you be accountabl e - the secret sauce of promise keeping. Declare your intentions and have someone other than yourself hold yourself accountable. Fail quickly - If you can’t keeping your promise ask for help and do so as early as possible. We all need help from time to time and this is how we learn.

In recent months while reviewing several ESG reports I noticed that these reports have evolved from simply reporting on Environmental, Social, and Governance as ambiguous as that can be. They have expanded to include many other topics of interest to stakeholders such as: Diversity, Equity, and Inclusion Sustainability Health and Safety Cyber Security Privacy Protection Information Security Climate Adaptation Enterprise Risk Management ESG Priorities and Initiatives And many others ESG reports are also becoming a significant source of internal obligations as they are filled with board level commitments, goals, and targets. In previous blogs I discussed that ESG has more to do with a social license to operate rather than a legal one. In this context, "social" can be substituted for "stakeholder" – anyone who has a stake in the activities of the business. As a result, managing ESG commitments will most likely fall outside traditional compliance programs structured around legal and mandatory obligations. In fact, ESG commitments tend to be performance and outcome-based which requires organizations be proactive and integrative in their approach. This will mean more programs to introduce change rather than only systems that resist change to achieve consistency and conformance. The need for compliance to adapt to performance and outcome-based obligations has been happening for some time for those in highly-regulated, high-risk industries specifically around safety. It appears that ESG commitments will be added to these and may now become a key and perhaps dominate driver of compliance change. What we can be certain of is that reactive, check-box compliance focused on audits and action items will not be enough to address ESG commitments. Instead, compliance will need to be re-imagined and engineered to advance outcomes and meet targets in the presence of uncertainty. If you want your compliance team to learn how this is done consider joining "The Proactive Certainty Program™". This program teaches you how to take a proactive and integrative approach to compliance so you can always stay between the lines and ahead of risk. Take the first step and complete the scorecard available here .

As T.S. Eliot wrote: “It is impossible to design a system so perfect that no one needs to be good”. Professional engineers are those that promote that good. Engineers and more broadly the engineering profession have for years applied scientific knowledge for practical purposes and the good of the public at large. This comes with significant responsibilities to “do good” and protect the public from the harms that might come from the technology used. Over the course of the last several decades the original fields of engineering have grown to include other applied sciences such as: computer, sustainability, environmental, bio-medical, social, cybersecurity, safety, aerospace, risk, process safety, and many many more – most likely hundreds of fields. Unfortunately, the role of a professional engineer has not progressed to participate in these other domains. For example, the use of engineering stamps on drawings as a way to help provide assurance of public safety has not found its equivalent for other areas of the profession. However, far worse, engineers have more broadly been left out of the conversation regarding ethical aspects and protection of public harm. Back in the day, although my degree was computer engineering its core was electrical so that it could be accredited by the professional engineering association. Technically, the profession had not found a spot for computer engineers. Even today this has not really changed. Upon graduating I pursued a professional engineers license in support of my duty to protect the public something that I strongly agreed with. However, what would a computer engineer do with a professional engineer's stamp? Would we stamp computer architecture diagrams or other design documents? I never have or was every asked to. As my professional association is currently heading towards elections there is talk about modernizing the profession specifically governance and regulatory aspects. However, I wonder if we might do better to work towards the elevation of professional engineers beyond the traditional five to all engineering practices. Engineers need to have a voice to speak up to the ethical and societal aspects of the growing list of technologies that are used. We need to find an equivalent of the engineer's stamp for all of engineering. Now, I realize that there is nothing special about the stamp. What is important is what the stamp symbolizes. The stamp represents that the engineer takes responsibility for the engineering work and will be held accountable for it. It is a stamp of assurance – a seal of trust. The public today still needs the same assurances. We need engineers more than ever as we look to science and technology to help address climate change, sustainability, cyber risk, and many other public concerns. However, we just don't need their technical knowledge and skills. We also need their commitment to public safety and to do good which requires a modern day stamp of assurance and seal of trust. So yes, there is still a role for professional engineers and we need more of them in every field of engineering.

This week we explore a question that was posed in reference to IIA’s 3 line model “should risk management be connected more closely with internal audit?” As a quick overview: The 3 lines model is an updated version of what was previously known as 3 lines of defence. This updated version clarifies and strengthens how key organizational roles work together to provide strong governance and risk management. The first line of the IIA model focuses on management responsibility to deliver products and services. The second line of the IIA model provides assistance to the first line to contend with risk. The third line is the audit function providing independent and objective assurance and advice. Governance provides oversight across all lines enabling accountability, assurance, and actions. The model depends on all functions working together to create and protect value With respect to risk we can make the following observations: The first line has managerial accountability for meeting organizational objectives and obligations. Management is responsible to contend with common risk (i.e. strategic, operational, tactical) along with specific risks associated with safety, security, sustainability, environmental, quality, and other organizational objectives. The second line provides expertise, advice and support to manage specific risks and to ensure that effective measures are in place. There can be overlap in responsibilities between the first and second line, however, the second line is usually not accountable for the outcomes of risk. The third line (audit) does not have managerial accountability for organizational objectives or responsibility to contend with risk. Internal audit does have accountability with respect to the delivery of audit services. Audit effectiveness depends on many thing but mostly on its independence and objectivity. Discussion: The 3 lines model (diagram above) shows internal audit connected to management (first and second lines) as well as governance. The question of how close this connection should be is a reasonable one and worth investigation. With respect to accountability for obligations and its risks they do not belong to internal audit (3rd line) or risk management (2nd line). As a consequence, contending with uncertainty remains a first line obligation assigned to those answerable for outcomes which IIA clearly calls out. Risk as most now define it, are the effects of uncertainty on objectives. To contend with risk you need clear and concise objectives (lacking ambiguity) and have estimated the level of uncertainty associated with meeting them. From this measures can be put in place to improve the probability of meeting those objectives. These activities need to be managed, monitored, and continuously improved to ensure risk levels or below specified risk tolerances. This function is primarily proactive in nature which is defined as to anticipate, plan, and act to increase the probability of the outcomes we want and decrease the probability of the outcomes we don't want. Audit on the other hand, follows reactive and retrospective behaviour and practices most often concerned with verification of processes (i.e. controls) and procedures. Audit seldom validates effectiveness of programs and systems as measured by the realization of targeted outcomes. As risk management is concerned with both value protection and value extraction its focus includes outcomes produced by the underlying systems and something that audit struggles with measuring. Audit most often focuses on if things are done right rather than if the right things are done. This is not to say that some may provide advice on the latter, however, this works against audit being objective and independent. When businesses lean to much on audit’s advise, managerial accountability is diminished along with audit’s objectivity. This is something that should be avoided. Aligning risk management more closely with a function that is reactive such as internal audit also introduces the risk of reinforcing the wrong behaviours. Risk management needs to remain proactive and requires a culture that reinforces practices that are more prospective than retrospective. Audit’s reactive culture would compete and dominate to the detriment of risk management. If risk management should be connected more closely to something it should be connected with proactive functions involved in visioning and goal setting such as governance. However, what is more important is for risk management to work more closely with first line management. They need to be part of the team to provide assurance (confidence) that objectives will be met. This can best be done when risk management is integrated with the business something that audit cannot do as it must remain independent. Conclusion: Should risk management be connected more closely with internal audit? Probably not, for reasons that include: Different cultures: proactive versus reactive Different purpose: ensure objectives versus verify objectives Different strategy: integrate with business versus independent from business What do you think?

Compliance leaders know that when it comes to risk there is more than one type of dragon to contend with. Effective compliance is about handling uncertainty to decrease the probability of non-conformance as well as increase the probability of conformance associated with meeting legal, regulatory, and stakeholder obligations.

Effectiveness: the final frontier. These are the voyages of USS Integrity, our continuing mission to meet and advance stakeholder obligations. To seek out new levels of performance and new standards. To boldly go where no organization has gone before. Ships Capabilities ... STAR-FLEET (board of directors) - identify corporate risk and commission compliance missions. STAR-FLEET DATABASE (obligations & risk register) - register of stakeholder obligations, risks, and corporate objectives. OFFICERS (CEO, corporate officers) - accountable for achieving compliance mission success. BRIDGE (management, steering committees) - plan, execute, and monitor compliance effectiveness and performance. COMMAND (management) - execute projects, initiatives, and tasks to achieve compliance objectives. CREW (staff, contractors) - provide skill, talent, and capability to meet compliance objectives. THRUSTERS (risk & compliance programs) - provide capabilities to move forward and stay on course. ENGINEERING (risk & compliance specialists, lean, etc.) - maintain risk & compliance measures running at peak efficiencies. MAINTENANCE (reliability and preventative programs, integrity management) - maintain the health of the organization. MEDICAL BAY (health and safety, first responders, primary care) - maintain health of crew. STELLAR CARTOGRAPHY (obligations map) - map the regulatory compliance terrain, organizational goals, outcomes and objectives. HELM (management) - plot course to higher standards while avoiding obstacles and taking advantage of opportunities. NAVIGATION (balanced scorecard, KPIs) - maintain course, stay between the lines SHIELDS (resiliency, integrity, margin, safety, etc) - protect organization and staff against threats and obstacles. ESCAPE PODS (emergency response) - save crew in case of emergency TACTICAL (risk and compliance measures) - defend crew and organization against threats and pursue opportunities. SHIPS LIBRARY (document management) - database of regulations, standards, policies, procedures. ALERT STATUS (change management) - adapt to changes in objectives, terrain, threat levels. AWAY MISSIONS (Gemba, investigations) - first contact, reconnaissance LONG RANGE SENSORS (leading indicators) - threat detection MISSION LOG (records management) - add to and update knowledge base Act 1, Scene 1 USS Integrity ready to leave space dock after making needed repairs ... Captain's quarters ... Captain makes log entry: Star Date : now Our last incident almost took us out. We lost some of our crew and star fleet is unsure we can complete our next mission. Work is proceeding on the USS Integrity as the crew completes needed repairs and modifications. Will they be enough? Will our defences hold this time? They must. The galaxy is depending on us to succeed. Bridge hails the Captain: This is Spock. Repairs completed captain. Captain responds: Do we have any problems with compliance? Spock responds: Compliance presents no problem. Captain speaks: Then, Mr. Spock. Let us comply. and let's hope we don't run into any auditors. Spock: Indeed.

When it comes to safety there are two schools of thought. The oldest one is focused on behavior and its by-line is, " Act Safe ." This is the domain of Behavior Based Safety or BBS and has been around for many years and has contributed significantly to improving occupational safety. However, a major problem with this approach is the tendency to blame the person should an incident or mishap occur. This results in workers not wanting to report incidents or even near-misses, and who would blame them for not wanting to under a climate of fault finding. The second school of thought focuses on systems and processes and its by-line is " Be Safe ." This is the realm of Human and Organizational Performance or HOP . This is relatively new and parallels the work in process safety management. The goal is to use systems and processes to create the conditions for people to be safe. In a manner of speaking, this approach reduces risk so that individual behaviors are less likely to cause an incident. This approach is also not without its problems as it can sometimes lead to "blaming" the system and loss of accountability for human action. Nevertheless, HOP has helped to address systemic safety issues that would otherwise not be addressed by human behavior alone. There has been much debate in recent years as to whether HOP will replace BBS or whether they will merge into one approach, or even turn into something new altogether. It is my belief that both are needed as they deal with two different aspects of safety and here is why. Root Cause Analysis Dean Gano, the creator of the Apollo Root Cause Analysis method [2][3], goes back to St. Thomas Aquinas (13th Century Philosopher) to help us to understand the nature of cause and effect. Aquinas writes that the existence of potency (i.e. capability) cannot reduce itself to act. As an example, "the copper cannot become a statue by its own existence." For that to happen you need a sculptor to act on the copper to make it into a statue. In other words, for an effect you need both a condition and an action . In fact, an effect needs a prior cause and that cause needs both a condition and an action and so on. This leads to the conclusion that a cause and an effect are the same thing. This distinction is an important one and one that is often lost when using other methods for attempting to discover the "rootiness" of a cause. The point that I would like to highlight is that at every branch (see previous Figure) in the analysis you always have at least one condition and one action. A condition by itself is not enough and neither is an action. This is where the two schools of safety come in. Without the presence of a risky condition (the focus of HOP) an adverse effect is less likely to occur no matter what the action might be (of course there are exceptions). Similarly, risky actions will not be a problem if there are no risky conditions. You cannot have an explosion without bringing an ignition source (the action) into the presence of a flammable gas (the condition). The consideration of both actions and conditions is helpful to understand why we might need both the benefits of an effective BBS based program to address behavior as well as a HOP based approach using systems and processes to create safer conditions. However, we cannot so neatly put everything into one of the camps or the other. The two towers need to work together. The Apollo Root Cause Analysis would have us look for a prior condition and action for every behavior and a prior condition and action for e very condition. To put it another way, each camp needs to be resident in both towers. Perhaps, this might suggest that the two towers might indeed become one and using methods like the Apollo Root Cause Analysis might help to integrate the two schools of thought. Until then, no matter what approach you choose, Be Safe, Act Safe Further reading: Aurisicchio, Marco & Bracewell, Rob & Hooey, Becky. (2016). Rationale mapping and functional modelling enhanced root cause analysis. Safety Science. 85. 241-257. 10.1016/j.ssci.2015.12.022. The Apollo Root Cause Analysis, https://www.apollorootcause.com/ RealityCharting, https://www.realitycharting.com/ Behaviour Based Safety, https://en.wikipedia.org/wiki/Behavior-based_safety Safety and Performance Excellence: The Two Dimensions of Safety, https://www.ehstoday.com/safety-leadership/safety-and-performance-excellence-two-dimensional-safety

"Compliance, in many ways, is about doing the right thing at the right time in the right way. Collecting evidentiary material is an important aspect in providing assurance, and for many companies, it is a way to improve compliance. This evidence often comes in the form of data and plenty of it. Companies measure, gather, and store data of all kinds and in increasing amounts. In fact, as companies continue their digital progression, the amount of data is expected to balloon. All this data will be analyzed, and patterns will be discovered. This will help in updating our system models and processes to make them more efficient. Recent advancements in artificial intelligence and machine learning will take this to even higher levels and discover patterns that we currently cannot see, and all of this can be used for improvement. However, even with these advancements, what this data will never be able to tell us is how things “ought” to be. In other words, data cannot be used to determine what is right." – Raimund Laqua Read the full article in the Sep/Oct 2018 Ethikos - Journal of Practical Business Ethics which you can download here . Copyright [2018] Lean Compliance Consulting, Copyright [2018] ethikos, a publication of the Society for Corporate Compliance and Ethics (SCCE), Copyright [2018] Compliance & Ethics Professional, a publication of the Society for Corporate Compliance and Ethics (SCCE).

Effectively managing risk is essential to every business. To achieve this, companies will typically have several programs to address different sources of risk such as: asset integrity, damage prevention, injury reduction, process safety, corporate risk, and others. All of these programs inherently serve to reduce risk to business, people, assets, and the environment. However, each program may differ in how they think about about risk and how it should be addressed. This can lead to confusion when cross-functional teams are brought together to identify risk when changes are being considered. It is common during organizational changes to bring various groups together to assess any new risks arising from the proposed changes. Far too often, these discussions are not as productive as they could be because of the definition each group has for risk. For example to: Engineers , risk is a hazard, Management , risk is about uncertainty on system objectives, Health and Safety , risk is a threat to personnel, Finance , risk is threat to return on investment, Project Managers , risk are threats to schedule, cost, and quality In addition, in recent years, regulators and standards organizations have started using broader definitions for risk beyond just simply referring to hazards. These different views of risk can lead to uncertainty concerning what assessment tools to use, how risks should be treated, and the controls and measures that need to be in place. For example, to those involved with process safety, risks are tightly connected to hazards. If you remove the hazard, you remove the risk. So the discussions tend to focus on hazard identification and barriers. However, this technique does not have parallels when considering impacts arising from organizational changes, cyber threats, and other sources of risk. For the latter, there are other techniques that need to be used to identify and address risk. To help reduce confusion when discussing risk it is helpful to use the same definition for risk. Using a consistent risk framework and specifically for the definition of risk across compliance programs can help ensure that risks are adequately identified and treated. The ISO 31000 risk management framework offers a definition for risk that can be used across multiple risk domains. This definition focuses on the effects rather than the chance that a risk will occur: With some work, compliance programs can be re-framed using this definition (or one similar to it) to provide a consistent vocabulary for talking about risk. Over time, this change will improve the outcomes of risk identification discussions, minimize the misapplication of risk assessments and treatments, and bring greater clarity as to the level of risk contained in corporate risk registers. Plan- Do-Check-Act Questions : In what ways has different meanings of risk affected your compliance programs? How would your risk program benefit from using a common risk framework? What step could be taken to increase the effectiveness of risk management within your organization?