Ethics, Compliance Auditing, and Emerging Issues

Emerging Global Geopolitical Risk 

The current Achilles heel on a global geopolitical perspective is the South China Sea crisis. The South China Sea is a very small portion of the surface of the earth but it poses a major global risk. The tension that has been building up within the Sea is massive and if the tension leads to a flare-up , several nations will be directly impacted while almost all nations of the world will be indirectly affected. The risk relating to the South China Sea is territorial in nature and pits China against Indonesia, Malaysia, Cambodia, and Taiwan. The nations have not been able to agree on where the border between them lies and which of the many islands within the sea belongs to each of the countries within the dispute (Fisher, 2016). All mechanisms to solve the crisis including those involving the United Nations have failed, mainly because China has ignored a UN court ruling. If the crisis escalates, war could ensue between the involved nations and their allies who include the USA. 

Countries Associated with the Risk 

The main countries involved in the risk are China, Indonesia, Malaysia, Cambodia, and Taiwan. However, the US has a treaty with Taiwan in which it guarantees it protection against China. The dispute may not create an all-out war between the USA and China but America would have to get involved. 

The Effects of the Risk on Each Country 

The primary effect of the materialization of the risk is a war between China, Indonesia, Malaysia, Cambodia, and Taiwan. Since the crisis revolves around the South China Sea boundaries alone, it is possible that an all-out war of attrition would be avoided in preference for a naval war limited to the South China Sea. The naval war would automatically make the South China Sea un-navigable for merchant ships. Approximately 33% of all global shipping passes through the South China Sea thus, its blockage would have a devastating effect on global commerce (Crabtree, 2016). Finally, the USA would have to intervene on behalf of Taiwan, a fact that would end trade between the USA and China, only temporarily but with a devastating economic impact on the two major trading partners. In summary, the five countries directly involved in the conflict would be inactive warfare while the US would be involved directly from a military perspective and also through lack of trade with China. 

Role of Ethical Decision-making 

Geopolitical problems affect commerce in two extreme ways. Some businesses benefit exponentially while other businesses make tremendous loses and this happens contemporaneously. If the South China Sea crisis escalates into a war, many companies will be facing financial ruin while several other countries will be on the eve of a pecuniary windfall. Both sets of companies stand in dire need of ethical decision-making. When faced with great opportunities, there is a high risk of making rash decisions to capitalize on the gains. On the other hand, when faced with imminent collapse, entrepreneurs will be willing to break laws, rules, and regulations to save their companies or mitigate loses. Ethical decision-making enables managers and organization to do the right thing, even when doing the wrong thing looks expedient (Gonzalez-Padron, 2016). Breaking ethics because of expediency will always have negative ramifications for the company. Ethical decision-making enables the decision-makers within the organization to slow down, evaluate their options and make the right decisions. Having a formal and structured decision-making process also avoids bias and knee-jerk decisions that might have adverse ramifications in the long run (Crane & Matten, 2016). The five countries involved in the South Sea crisis have vested interests in the said sea, which includes either making gains or avoiding loses. Seeking the gains or avoiding the losses should not be preferred at the expense of doing the right thing and being fair to all stakeholders (Chell et al., 2016). The respective decision-makers for the countries involved need ethical decision-making to avoid breaching ethics for the sake of expediency which would escalate the situation. 

Impact of Business Ethics on Stakeholder Relationships 

Every business has a variety of stakeholders whose interests vary exponentially and to some extent contradict one another (Crane & Matten, 2016). For example, the shareholders would want the business to make the highest possible profits. On the opposite end of the divide, the client would want the best possible product at the lowest price. Between the two is the employee who would want the easiest work schedules at the highest possible pay. Finally, there is the society that would want the company to always do the right thing and spend as much as possible in community programs. It is impossible for the company to please all these people and, fortunately, pleasing all of them is not fundamental. Not displeasing them is, however, paramount. Ethics enable a business to carry out its business in a manner that does not directly or intentionally displeases any of its stakeholders (Chell et al., 2016). The business will, therefore, develop a positive reputation and trust with all stakeholders so than in the event of a crisis, all the stakeholders will be able to give the business the benefit of doubt. Adhering to ethics enables a company to have a firm, long-lasting and mutually beneficial relationship with its stakeholders. 

The necessity of Ethics Program, Training and Ethics Auditing 

Doing the right thing in the midst of a crisis is not easy, more so when expediency demands that the wrong thing be done and there is a low risk of getting caught. The competition to create a self-driving car depicted in Gonzalez-Padron (2016) shows how easy it is breaking rules when the opportunity for massive profits arises. In most cases, businesses do not know when they breach ethics and in some cases, they passively avoid knowing that they are breaching ethics because they are biased. The only sure way to protect the business from harming itself through breaching ethics is to have an ethics program in place. The necessity for creating an ethics program is to protect the business by ensuring that the business makes the right decisions even when making the wrong decisions seems expedient (Crane & Matten, 2016). 

Making the right decisions is a structured and complex process whose parameters keep on changing. For example, ethical decision-making has changed exponentially based on the changes that computerization has brought to entrepreneurship. With the advent and proliferation of artificial intelligence and machine learning, the parameters, structures, and processes of ethical decision-making will change again. Training with regard to ethical decision-making is thus necessary to enable entrepreneurs to learn how to make ethical decisions in spite of the complexities of the modern business world (Chell et al., 2016). Continuous training is also necessary to adjust the skills of managers to keep up with changing trends. Finally, ethics auditing is necessary because ethical decision-making is carried out by humans and humans are liable either to error or temptation. Editing will root-out the errors made or call out the intentional breaches of ethics. Most importantly, ethics auditing evaluates the efficacy of the processes that have been put in place to ensure that ethical decisions are made (Usnick & Usnick, 2013). In the case the process is ineffective, adjustments can be made accordingly. 

Training Plan for Ethical Considerations and Social Responsibility 

Goals of the Training Program 

The training program will have three primary goals premised on the three foundations of ethical decision-making. The first goal is to ensure that the trainees adopt ethical decision-making as a lifestyle which they both believe in and are committed to adhering to at all times. Like a chain, ethical decision-making is as strong as its weakest link, meaning ethics decision-making only works when applied every time it is necessary (Crane & Matten, 2016). All training would be futile unless the trainees are committed to always adhere to the dictates of the ethical decision making. The second goal is to ensure that the trainees get all the necessary information about ethical decision-making including its structures and processes. The final objective is to ensure that all trainees know how to apply what they have learned about ethical decision-making in their day to day operations and activities. 

Objectives of the Training 

The first objective is teaching the ‘why’ of ethical decision-making and also the ‘why’ of training on ethical decision-making. The second would be teaching on the vagaries of making unethical decisions or of not following proper ethical decision-making procedures. The two objectives are geared towards ensuring that ethical decision-making becomes part and parcel of the trainee’s decision-making process (Crane & Matten, 2016). The third objective would be to teach the trainees how to identify decisions that demand structured decision-making processes. Another objective would be to teach the trainees on the different models of ethical decision-making such as the five, six and seven-step models. The fifth objective would be to train the participants on how to apply the different models in different scenarios that require ethical decision-making. The sixth would be monitoring and evaluating the implementation of the decision so made. The seventh objective would be to teach the trainees about ethical auditing and leadership. 

Learning Methods/Activities of the Training Program 

Component	Knowledge to be Taught	Method of Teaching	Knowledge to be Taught	Method of Teaching
Adopting Ethical Decision-making	Importance of ethical decision-making	Theoretical teachings, Case studies, and skits.	Importance of Training on ethical-decision-making	Evaluating case studies and participating in skits.
Vagaries of Unethical decision-making	Unethical decisions are counterproductive	Theoretical teachings and case studies	Benefits of sacrificing ethics for expediency are short-lived.	Case Study and skits.
Identification of Decisions that Needs Structured decision-making	Identifying pertinent issues within every decision.	Theoretical teaching	Separating casual from major decisions	Theoretical teaching.
Models of ethical decision-making	Particulars of the Different Models	Theoretical teachings	Differences between the models	Theoretical teachings and case studies.
Application of Structured Decision-making	How to Apply the different methods	Case studies and practical skits	Avoidance of bias in the application	Case studies and practical skits
Implementation, monitoring, and evaluation.	Implementation of the decisions made	Theoretical teaching	Evaluation and Monitoring	Case Studies
Ethics Auditing	Grounds for ethical auditing	Case studies and skits	How to conduct ethical studies.	Theoretical teaching, case studies, and skits.

Evaluation of the Training Program 

Each of the seven objectives of teaching will represent a set of lessons as outlined in the table above. The first form of evaluation will be undertaken during the course of the training. As reflected in the table, the training will involve a lot of participation by the trainees thus the trainers will be able to detect the progress of the trainees. Participation will reveal which trainees are excelling and which ones are struggling. The second form of evaluation will involve assessment tests which will be taken with regard to each of the seven objectives as reflected above. 

Description of How the Training will be Conducted 

Based on the training plan outlined above, the instant training is rigorous but brief and can be completed within the course of three days. The three days will be enough for the theory part of the training and also the practical aspects which involve an element of dramatization. The best way to carry out the training is to get the trainees together in a place specifically set apart for the training such as a holiday resort. The seclusion will empathize on the seriousness of the training and also enable the trainees to focus on the training. At the same time, the seclusion will afford the right atmosphere for the dramatized part of the training. The theoretical parts of the teaching will be carried out in the morning sessions. The pre-noon sessions can be used for the case-study training which will involve active participation from the trainees in the form of a plenary discussion. Finally, the evening sessions will be used for the practical lessons. The written unit tests can be provided to the trainees to undertake at their leisure. 

Compliance Auditing Process 

Compliance auditing is a continuous process which needs to combine an element of continuity combined with an element of sporadic spontaneity. The continuous process of ethical auditing takes the form of ensuring that the decision-making processes are done in a structured manner with notes being taken and retained in every step of the process (Usnick & Usnick, 2013). The taking of notes will be useful in ensuring that the decision-maker is careful to adhere to the ethical process and will also be available in the case there is a need to evaluate the process. The second part of continuity in ethics auditing is the proviso of an effective whistle-blowing mechanism. Every person involved in decision-making will avoid the temptation of sacrificing ethics due to the knowledge that there are effective and confidential means of communicating ethical flaws to the management officer in charge of ethics. Finally, the sporadic spontaneity aspect of the evaluation of ethical decisions involves randomly assessing decisions that are in the process of being made or have been made to ensure that ethics have been applied to the later (Usnick & Usnick, 2013). 

Summary of Key Findings 

Ethical decision-making entails seeking to make the right decision at all times, more so when the right decision does not seem right at the moment or when expediency demands the making of a decision that does not seem to be right. In a business setting, making the ethical decision may come at the expense of profit or even at the expense of not pleasing a certain pertinent stakeholder. In the middle of a crisis, for example, seemingly wonderful opportunities either to save the business or to make high profits will always present themselves at the expense of a seemingly harmless breach of ethics. Succumbing to such temptation may be gratifying in the interim and even seem to aid the business. However, in the long run, unethical decisions will always be counterproductive. Further, unethical decisions affect stakeholder relationships as pleasing one stakeholder comes at the expense of the trust of all stakeholders eventually. Ethical decision-making is a structured process that requires a high level of skills. It is, therefore, necessary for individuals involved in ethical decision-making to be properly trained on the same. Proper training should take a structured multi-dimensional format to cover all perspectives of training. The perspective includes why ethics must be applied at all times, the models of ethical decision-making, how to apply these processes and also ethical auditing. Ethical auditing is critical to ensure that all parties follow the laid down structure for making ethical decisions. Further auditing is critical in ascertaining that the said processes actually work. A multi-dimensional approach that combines continuous auditing and sporadic auditing would be effective in auditing making of ethical decisions and also auditing of the processes used. 

References 

Chell, E., Spence, L. J., Perrini, F., & Harris, J. D. (2016). Social entrepreneurship and business ethics: Does social equal ethical?.  Journal of Business Ethics ,  133 (4), 619–625 https://doi.org/10.1007/s10551-014-2439-6 

Crabtree, J. (2016, July 19). Why South China Sea disruption could have 'gigantic' consequences for global trade. Retrieved from https://www.cnbc.com/2016/07/18/why-disruption-in-the-south-china-sea-could-have-gigantic-consequences-for-global-trade.html 

Crane, A., & Matten, D. (2016).  Business ethics: Managing corporate citizenship and sustainability in the age of globalization . Oxford University Press 

Fisher, M. (2016, July 14). The South China Sea: Explaining the dispute. Retrieved from https://www.nytimes.com/2016/07/15/world/asia/south-china-sea-dispute-arbitration-explained.html 

Gonzalez-Padron (2016). Business Ethics and Social Responsibility for Managers . Colorado Springs, Colorado: Bridgepoint Education, Inc. 

Usnick, L. E. E., & Usnick, R. (2013). Compliance program auditing: The growing need to insure that compliance programs themselves comply.  Southern Law Journal ,  23 , 311-327