How compliance managed COVID’s effects on incident reports

At the peak of the pandemic last spring, when most organizations shifted to remote work, “there were legitimate concerns this would negatively impact compliance’s ability to successfully navigate allegations,” Andrew Burt, content developer at NAVEX Global, said Monday on a Webinar discussing the findings of the report, which is due out in May. The study’s data—which drew from more than 1.3 million global incident management reports from over 54 million employees in 2020—revealed just the opposite.

For example, one key finding showed the median number of days it took to close cases decreased from 45 in 2019 to 39 in 2020. The 2020 level is the report’s lowest since 2014, despite many having to conduct investigations remotely.

The largest decline in case closure time concerned matters of environmental, health, and safety (EHS). In the same aspect, while overall report volume decreased, the percentage of EHS reports more than doubled at the start of the pandemic. As of December 2020, EHS accounted for 17 percent of all reports, according to NAVEX Global.

“It’s important to ensure we are communicating the mechanisms that are available for all of our employees, to remind them that even though they may be remote they still have the opportunity and obligation to report suspected wrongdoing.”

Carrie Penman, Chief Risk and Compliance Officer, NAVEX Global

“Compliance didn’t just close cases quicker—they were able to substantiate allegations at the same rate they had in prior years,” Burt said. The median substantiation rate in 2020 (42 percent) dropped one point lower than where it was in 2019.

“These findings are an indication of positive program communication and investigative efforts, and organizations are continuing to receive high-quality, actionable reports,” Burt added. Taken together with the decrease in case closure times, the findings “demonstrate the ability of compliance programs to successfully navigate the substantive challenges posed by the COVID-19 pandemic,” he said.

The report also revealed a 39 percent increase in business integrity reports, which may have to do with COVID-related fraud, waste, and abuse allegations drawing increased attention since last summer. Accounting, auditing, and financial reporting and misuse of corporate assets, meanwhile, remained flat throughout the year.

The events of 2020 further accelerated some trends that have been in motion for a while. For example, reports made through the Web increased by 7 percent, while reports over the phone fell 9 percent. In 2020, nearly half of all reports were made via a Web-based option.

Red flags

The data revealed a few problem areas compliance officers need to watch for. For example, the average time gap between when an incident occurred and when it was reported increased by 33 percent—from a median of 21 days in 2019 to 28 days in 2020.

This gap was most pronounced in accounting, auditing, and financial reporting, where it increased by more than 125 percent (16 days to 36 days). This may partially be attributed to COVID-related fraud and corruption incidents, and the delay suggests organizations might want to do more to ensure employees feel comfortable reporting issues—even if working remotely.

Another red flag was fewer reports of retaliation. “Just because we don’t receive reports of retaliation doesn’t mean it’s not occurring, and it doesn’t mean employees don’t have that fear,” NAVEX Global Chief Risk and Compliance Officer Carrie Penman said.

Internal reports of retaliation dropped below 1 percent of all reports received. While reports on harassment and discrimination issues have been decreasing since the height of the #MeToo movement in 2018, “this drop is notable when considered against the focus on social justice issues during the past year,” NAVEX Global stated.

“In times of uncertainty, people are more fearful,” Penman said. “This is a good time and a good reminder to take a look at your retaliation prevention programs.” Training on issues of retaliation and helping managers and supervisors recognize retaliation—those are things compliance officers need to continue to focus on, be aware of, and deal with right away, she said.

Also of note was the overall decline in report volume, which fell from 1.4 reports per 100 employees in 2019 to 1.3 in 2020. NAVEX Global attributed the drop to pandemic-related events. “That’s actually quite a significant drop, and it’s the first time we have seen report volume decline in the history of our benchmarking work,” Penman said.

Some companies will have a higher report volume, whereas others will have a lower report volume—there is no right range. “It’s important to ensure we are communicating the mechanisms that are available for all of our employees, to remind them that even though they may be remote they still have the opportunity and obligation to report suspected wrongdoing,” Penman said.

Another thing compliance officers will want to keep in mind is the importance of following up on anonymous reports. “In order for compliance officers to be able to resolve issues that are raised, it’s really important for them to stay engaged in the process of the report,” Penman said.

All told, 2020 brought with it a heightened opportunity for compliance officers to further elevate themselves within the organization by stressing the importance of reporting channels; ensuring employees are comfortable making reports; and ensuring managers and supervisors are familiar with, and follow, anti-retaliation protocols. This is a time when a lot of employees are reevaluating their priorities and what’s important, Penman said, “and, frankly, how much misconduct they may be willing to tolerate going forward.”