Chapter 11: Applying a Primary Risk Management Model to the C-Suite: Strategies for Executive Ethics

In the wake of ethics scandals scattered across the turn of the 21st century, public perceptions of executive ethics plummeted, leaving long-lasting effects. Backlash from these events has placed organizations in an ever-increasing spotlight, accompanied by external pressures imposed through the media and various other stakeholders (Heineman, 2007). Shareholders look for growth in the economic value of firms, yet the public demands transparency and social responsibility. Legislative changes such as those sanctioned through the Sarbanes-Oxley (SOX) Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and regular amendments to the Federal Sentencing Guidelines for Organizations (FSGO), among others, require that organizational leaders stay current on ethics institutionalization (Ferrell, Fraedrich, & Ferrell, 2013). More than ever before, successfully balancing the work being performed in organizations along with the ethical implications of the work is of the utmost importance for effective leadership (Mumford, Peterson, MacDougall, Zeni, & Moran, 2014).