Ethical-misconduct disasters are serious risks to companies, whether public or private, large or small, old or new. The ability to survive an ethical calamity is never assured, even with companies whose reputations had otherwise been without blemish. Typically included in the major categories of such disasters are cases involving discrimination or harassment, criminal or illegal activities, bribery or improper influence, regulatory violations, customer deception, or financial improprieties.
The examples in the recent past of Enron and WorldCom, where 8 trillion dollars of stock value was lost, demonstrate all too clearly that ethical lapses can be devastating. Indeed, Enron had a 65-page corporate Code of Conduct that made virtually no difference after the scandal became public and metastasized. Once the genie is out of the bottle, it’s too late. No company is immune from scandals and the untold millions of dollars in liabilities that often follow in the wake.