On January 29, NAVEX is hosting the Top 10 Trends in Risk and Compliance webinar. This post is a preview of two of the topics covered in the eBook and webinar: the expanding landscape of whistleblowing and the increasing importance of internal investigations.
The expanding landscape of whistleblowing
Whistleblowers are a cornerstone in uncovering corporate misconduct, and regulators worldwide are making it easier for individuals to report wrongdoing. And companies lacking robust internal compliance systems now face expanding risks, as whistleblower programs like those from the SEC and DOJ gain traction.
The U.S. Securities and Exchange Commission (SEC) whistleblower program, active since 2011, is a prime example. With over $2.2 billion in awards distributed to date, the SEC incentivizes whistleblowers with confidentiality, anti-retaliation protections and the potential for significant monetary rewards. In FY 2024, the SEC paid $255 million to 47 whistleblowers, demonstrating the ongoing importance of these programs.
Interestingly, whistleblower tips to the SEC have leveled off post-COVID, with approximately 11,000 reports annually over the last two years ( excluding outliers). Reports originate globally, with Canada, the UK, India and Australia among the top contributors outside of the U.S. Notably, 38% of whistleblowers receiving awards were external to the organizations they reported on, which includes competitors and market observers.
Now, the newly-launched DOJ Corporate Whistleblower Pilot Program (CWPP) raises the stakes further. Offering up to $30 million for tips leading to successful forfeitures. This program targets areas not traditionally covered by other whistleblower initiatives, such as violations of the Foreign Corrupt Practices Act and private healthcare fraud. Companies now have 120 days to report internally discovered issues to the DOJ to qualify for leniency under the program’s policies – a ticking clock that places immense pressure on compliance teams.
Key takeaways for companies
Internal reporting and incident management programs are essential to combatting fraud, misconduct and other potential regulatory infractions. For many reporters, external reporting is an option pursued due to lack of trust in the system, fear of retaliation, and other personal factors. Creating a system that addresses those concerns starts with:
- Strengthening internal reporting systems: Ensure internal hotlines are well-resourced, accessible and user-friendly for employees and external reporters
- Prompt investigation: Investigate and resolve reports to prevent whistleblowers from contacting external regulators and communicate with whistleblowers so they know their report is taken seriously and being investigated
- Clear anti-retaliation policies: Advertise and enforce zero-tolerance policies to build trust and encourage internal reporting
- Document reviews: Check employment agreements, NDAs and compliance manuals for language that might impede external reporting
As whistleblowing programs expand globally, organizations that fail to adapt risk external exposure, regulatory action and reputational damage. Now more than ever, a proactive compliance strategy is non-negotiable.
The increasing importance – and visibility – of internal investigations
The days of quietly sweeping allegations under the rug have been over for quite some time – yet internal investigations are far from mastered by most organizations. Internal investigations are front and center, driven, in part, by DOJ and SEC whistleblower programs, both of which are designed to increase organizational accountability and a sign of growing regulatory scrutiny.
Why it matters
A well-functioning internal investigation program is not a “nice-to-have”– it’s a business imperative. Companies must triage, investigate and resolve allegations swiftly and consistently while demonstrating transparency to employees and regulators. This requires careful planning, resource allocation and metrics to measure success.
A new era of whistleblower incentives
The DOJ CWPP raises the bar for companies dealing with internal allegations. With significant monetary rewards and a focus on financial services, healthcare and corruption, the program creates added urgency for compliance teams, especially given the 120-day window in which organizations can self-report to be eligible for leniency.
Timeliness and consistent communication throughout internal investigations is key. Delays could result in regulators acting before companies can address the issue, jeopardizing their chances of leniency.
Are you ready for success?
The push for a “speak up” culture – encouraged by updated DOJ guidance on corporate compliance programs – is just one of many examples of regulatory pressure for organizations to prove their compliance program works in practice. While a speak up culture is widely recognized as a positive attribute for organizations, it does raise the question: Can your team handle an influx of reports made possible by a speak up culture?
Effective internal investigations hinge on three factors:
- Resource allocation: Ensure investigation teams are well-staffed and equipped to manage increased reporting volumes – what this means for your organization will depend on many factors and programs should be right-sized for your company
- Triage and referral: Develop streamlined processes for categorizing and redirecting reports to the appropriate departments so they can be investigated with the appropriate level of urgency
- Follow-up: Keep whistleblowers informed about the status of their reports to maintain trust and discourage external escalation
Metrics matter
Your internal investigation program will be judged on outcomes and the processes and metrics used to measure success. This includes tracking the number of reports handled, the resolution speed and lessons learned to improve future performance.
Balancing transparency and caution
While sharing “lessons learned” from investigations can foster a culture of accountability, companies must tread carefully to avoid oversharing sensitive information. Striking this balance is crucial to maintaining trust while protecting the organization from legal and reputational risks.
By building resilient systems, allocating appropriate resources and fostering a culture of transparency and trust, companies can reduce risks and strengthen their overall compliance posture. The bottom line? When it comes to whistleblowing and investigations, preparation and responsiveness are everything.
2025 Top 10 Trends in Risk and Compliance webinar and eBook
Register for the January 29, 2025, webinar to hear expert insights into the trends and receive early access to the complete 2025 Top 10 Risk and Compliance Report by clicking the link below.
