How to Implement An Effective Whistleblowing Reporting System

Written by Kevin Hart in collaboration with the www.fraudpreventiontraining.ie and EQS Group www.eqs.com



Part 1- Planning

Every organisation opting for a digital whistleblowing system takes an important step towards greater transparency, a key element of a healthy and modern corporate culture. The Association of Certified Fraud Examiners (ACFE) estimates that about half of fraud is detected through tip-offs and almost half of those tip-offs come from employees.


All organisations should be concerned over fraud and economic crime, and provide a safe and secure way for employees and other stakeholders to report what they know.

Above all, the option of anonymous reporting is appreciated by employees and external whistleblowers, increasing the number of valuable tips. After all, only those who receive such tips can take proactive action against wrongdoing at an early stage, thus minimizing risks, protecting the organisation’s reputation and securing trust both internally and externally.


What you should consider when introducing a reporting channel

The choice of how and what you implement is crucial and there are many factors that you should be considering including, amongst others, the organisational culture - When it comes to compliance the principle of “tone from the top” applies. Are senior and middle management behind the whistleblowing system? Is there an open culture where employees feel safe reporting wrongdoing? The answers to these questions contribute to the success of the system.


Involve stakeholders

As soon as discussions regarding the introduction of a whistleblowing system occur, prejudices can arise. From “snitch hotline” to the “start of a denunciation offensive” to “everyone is under general suspicion”, many employees who are unfamiliar with such a system may be skeptical about its introduction. A whistleblowing system is not about pillorying other people, colleagues or superiors. Rather, it is about being able to report wrongdoing in a protected environment. The whistleblowing system promotes an ethical work culture and strengthens trust both internally and externally.


The introduction of a whistleblowing system always affects several departments in an organization from management level to IT and from HR to the data protection officer.

To ensure the success of the system, it is important that all stakeholders participate

in the process as early as possible. This will include management, personnel representative committee, Purchasing, the Data Protection Officer, the Human Resources Department/HR and very importantly, the IT-Department.


Introduction of processes

As soon as a company has installed a whistleblowing system, the employees and

departments involved should prepare for incoming tips. Define in advance which person/team should process tips and how they should handle them.



Take a planned approach and consider answering the following questions:

  • Should all leads initially be handled centrally by one person/team?

  • Does it make sense to divide responsibility by topic or region?

  • What happens if the contact person is absent through illness or vacation?

  • Should a dual control principle be introduced to prevent improper handling of tips?

  • Do you have sufficient legal expertise and resources to internally handle the cases? (remember: who ever handles cases must be impartial and experienced with managing disclosures)

  • Or is external support needed (for example from another organization with experience in implementing and running a reporting system)?

Chosing the correct reporting channel(s)

In principle, various channels are available for a whistleblowing system, all of which

have advantages and disadvantages. It is important that the channel fits your organization. Many companies also combine different channels to increase the number of incoming reports.


To find out which channel fits your organisation, it helps to answer the following questions (amongst others):

  1. On which key issues do they expect to receive the most notices and in which areas do they want to minimise risks? (e.g. bullying, corruption, fraud, money laundering).

  2. Who should be able to submit tips?

  3. All employees or initially only part of the organisation?

  4. Should external bodies also be able to submit tips (suppliers, customers, agents)

  5. Do you want to allow anonymous reporting?

  6. In which languages do you expect to receive reports?

  7. Should the whistleblowing system be available outside of office hours?

  8. Should the system also be accessible on the road/outside the organisation?

The importance of anonymity

In many countries, whistleblower protection is still in its infancy. Fear of ostracism, loss of job or other consequences discourages many potential whistleblowers and means that important reports may not be received at all.



The possibility of submitting an anonymous report lowers the inhibition threshold for whistleblowers. Even if many companies fear that this will cause an increase in the number of reports, studies have shown that this is not the case: 60 percent of whistleblowers opt for an anonymous initial report.


Experience also shows that many anonymous whistleblowers do reveal their identity in the course of the dialogue, provided they feel safe and are taken seriously.


Common reporting channels and their pitfalls and benefits

The most preferred methods we see, as measured by the ACFE in the 2022 Report to the Nations (available here: https://www.fraudpreventiontraining.ie/reporttothenation2022) are:

  1. email based channels (most widely used)

  2. internet based channels (2nd most common)

  3. telephone based channels (3rd most common)

Telephone

Advantages:

  • Personal dialogue with whistleblower can help reduce inhibitions

  • Also suitable for people with reading and writing difficulties

  • The interlocutor can absorb information in a structured manner

Disadvantages:

  • No anonymity for the whistleblower – even when the number is hidden, the voice allows conclusions to be drawn

  • No possibility of sending documents in a protected manner

  • Call centers are generally not available round the clock

  • In the case of answering machine solutions, connection or sound problems can lead to transmission or comprehension errors

  • It can be expensive depending on the number of available countries and languages

  • A phone call takes effort

Digital whistleblowing system

Advantages:

  • The only channel that can guarantee anonymity, even during subsequent dialogue

  • No restrictions regarding possible languages and availability

  • Guided reporting process for documenting the most important aspects of a reported grievance

  • Secure online transmission of files and documents

  • Full compliance with all relevant data protection requirements (such as the GDPR)

  • Secure documentation of all notices, messages and files from the whistleblower, as well as processing steps in the system

  • Notices in foreign languages can be translated directly in the system by certified agencies

  • Simple mapping of decentralized processing of notices through role and rights concept as well as automatic routing of notices

Disadvantages:

  • The whistleblower must write down access data to the system in order to maintain dialogue with the company

  • In the case of highly individualized and multilingual systems (customized texts, questions, etc.), setting up the system can take time

Get in touch: kevin@fraudpreventiontraining.ie


Next Blog: Part 2 - Implementing your chosen system and communication

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