Marc Le Menestrel
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Ethical Risks: Identification, Mitigation and Transformation through Ethical Training

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by Marc Le Menestrel (12/09/2011)

The concept of « Ethical Risk » refers to unexpected negative consequences of unethical actions.

A proper training about ethical risks allows the identification, mitigation and transformation of ethical risks, improving organizational efficiency and developing organizational identity.

Identification

Due to the dual nature of the ethical judgment, most actions have both ethical and unethical aspects (Cf. Ethics as a grey zone). Actors tend to be unaware of the unethical aspects of the actions that they rationally choose, in particular when these actions are in their self-interest. Because of these unethical aspects, stakeholders act in an adversarial manner, imposing negative consequences on actors (legal and reputation costs in particular, but also breach of trust and revocation of license to operate). Because actors are unaware of the unethical aspects of their actions, these negative consequences are unexpected and constitute bad surprises.

Ethical training allows actors to identify systematically all possible unethical aspects of their actions, thus reducing the awareness bias and identifying ethical risks before they lead to bad surprises. Such ethical analysis can be carried out at the individual, organizational or societal levels.

Mitigation

When accused of unethical actions, actors tend to react negatively, emphasizing the ethical aspects of their actions and denying their unethical aspects. For instance, because they have implemented a compliance program, they find the exposure of their unethical aspects unfair and trap themselves in a reactive attitude. These attitudes further reduce the self-awareness of ethical risks and can progressively lead to an increased propensity towards unethical actions. This is the “slippery slope”. Such reactive attitudes mitigate ethical risks only superficially because denials and justifications are effective only for the conscience of the actor itself. They also lead to increase confidentiality of unethical aspects. On the other hand, denials and justifications tend to nurture the adversarial attitude of stakeholders that are alerted or harmed by actors’ unethical actions, overall leading to ethical crisis. Actors then face escalation of costs for the mitigation of unexpected negative consequences.

Ethical training allows actors to describe objectively their behavior and to anticipate the possible unraveling of ethical crisis. Aware of the unethical aspects of their actions, trained actors recognize the legitimate part of stakeholders’ reactions, communicate with more sincerity and engage with stakeholders, thereby preserving trust and alliances. Rather than behaving reactively, actors act proactively towards the mitigation of the unethical aspects of their actions.

Transformation

In reaction to their unethical behaviors, actors end up externalizing their locus of control, as if they had no other choice. In this manner, actors reduce their own power to identify a profitable alternative course of action. They reduce their freedom to choose. On the other hand, inclusive awareness of ethical and unethical aspects triggers a natural search for more ethical actions (Cf. Psychological attitudes towards ethical dissonance). A rational analysis of the interest of such a more ethical alternative allows avoiding exaggeration of its costs (without proper analysis, a typical justification of an unethical action is that an alternative course of action would be too costly). Further, awareness of potential ethical costs increases the relative attractiveness of an alternative more ethical action. The re-framing of the situation allows the identification of new opportunities otherwise hidden to the actors. Eventually, an alternative and more ethical action may be implemented with ethical effort and without much additional cost, considered as strategic investment. Avoidance of ethical risks then opens the path to unexpected positive consequences.

Ethical training allows actors to make sure they spend at least as much time looking for opportunities of more ethical actions than justifying the actions they expect to maximize their interest (i.e. unaware of the unethical risks these actions have). Decisions not to engage in more ethical actions are conscious, responsible and reflect a power of discrimination. They are not traps for the actor. Decisions to engage in more ethical actions do not follow a blind faith in the benefit of ethics. In this manner, ethical training turns ethical risks into opportunities by dedicating cognitive and organizational resources to the identification, mitigation and transformation of ethical risks.


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