Key Component of Workplace Ethics
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FINA3017How can ethical misconduct by financial institutions affects a firm’s reputational risk? What measures can be taken to safeguard this? Provide a relevant example or examples to the Caribbean.A key component of workplace ethics is integrity, or honesty and doing the right thing at all times.Now more than ever, how an organization does business is just as important as the results they achieve. Its no secret that many of the great reputational disasters of recent years have been made worse by attempts to sweep them under the rug.Ethical misconduct can be disastrous for any organization today. If any financial institution creates a situation where ethical misconduct is exhibited then, it would also be demonstrating its social acceptability of said misconduct as well it would blatantly expose the level of corruption inside the organization. This type of behavior would negatively reflect the reputation of the organization in the society as well, it would also reduce the overall impact of the institution’s reputation towards the future employees, customers and even investors, since if the reputation of the company is ‘tainted’ no one would want to attach themselves to its reputation. This can be seen in the most obvious case of CLICO, however I want to draw an example on the ‘Ponzi scheme’ Wake Up Now. This was a craze that swept Barbados and the Caribbean a couple years ago. It was described to would be victims as a financial investment, however it really was nothing more than a poor man’s scheme. It left such a negative reputation that it would be hard for anyone to convince any person to join if it suddenly re-immerged.Ethical misconduct also creates a problem of mistrust which would be very harmful for the companys standards for the further development of its functionality regarding different criteria for sustainability and proper operation inside the society. This type of approach would reduce the Institutions’ control and identity over the specific environment. The idea is that in the financial market people have the freedom of choice, so when a company uses deception or concealment it takes away that choice for a person to make a rational decision.` Where a company or individual is found guilty or suspected of churning, twisting or flipping, they can become victimized by investors who will obviously feel slighted. Churning breaches the fiduciary duty a company possesses to trade that work to the customer’s detriment. Therefore it is advised that financial institutions remember that they have an obligation to recommend financial products and services that are in the best interest of the client. Not quite similar but with a similar sentiment, the Four Seasons’ Project in Barbados, it was riddled with financial scandals, that investors began to pull out for fear that of course they would lose money, but also they did not want to be closely linked to any project that was being plagued by a company whose financial reputation was beyond repar.
Financial sustainability is also a greater part of the solid business model and innovation. By innovating in the financial field, an organization can easily find the best available strategies for gaining financial stability as well as sustainability for the organization. Good business models definitely helps an organization to grow more efficiently in the specific industry and to provide the financial stability as the sustainability for the better acquisition of funds in the business.By crafting out better strategy for talking to the investors as well as lenders for the benefit of the organization, chances of failure are widely reduced. Creating a sound strategical approach will help in the organization to be in contact with their investors and lenders which is an essential part of any business to carry out the functions of their work.Frederick the Great of Prussia has often been quoted as having said “Banking is a very special business that should be the province of very special people.” By “special” he presumably meant people who were honest and trustworthy to a fault, with a keen eye to their fiduciary obligations in handling other people’s money, and to do so in confidence.Prof Dr Ingo Walter, Leonard N. Stern School of Business says “As demonstrated by the kinds reputation-sensitive “accidents” that seem to occur repeatedly in the financial services industry, neither good corporate governance or stakeholder legal recourse or more intrusive regulation seems to be particularly effective in stanching reputational losses in banking.”All in all we can see that a solid model and innovation is necessary to provide support to the overall organizational structure and to improve the business model by a large margin. It also enables the organization to gain competitive advantage and to improve your overall situation and predict better Strategies for the future for operating in the same market field.Safeguarding this type of issue can easily be done by creating a strict code of conduct for the organization. A very strict code of conduct would ensure proper operation as well as ethical integrity which would you beneficial for the organization to be more productive towards all available resources and approaches for maintaining ethics and high moral standards which would create a positive institution identity and attract the new student for the same institution.