Sexual Harassment in Finance IndustryThe deluge of recent sexual harassment reports is extremely disturbing. Multiple accusations against Hollywood mogul Harvey Weinstein have opened up a Pandora’s Box of alleged abuses by actors, athletes, financiers, politicians, comedians and journalists.

On a human level, sexual harassment victims are often left traumatized by the incident. From a business standpoint, these scandals are risk manager’s nightmare.

Sexual Harassment in Finance and Technology

The financial industry is no stranger to sexual harassment. One whistleblower documented the abuse at Shearson Lehman, a stock brokerage firm of the 1980’s, in the expose ‘Tales from the Boom Boom Room’.1 And movies like The Wolf of Wall Street depict the exploits carrying into the 1990’s.

While the financial industry may have reigned in the most egregious acts, harassment is by no means absent.

But the pattern of sexual harassment has moved into one industry not typically associated with such behavior- technology. Like finance, the technology industry has been predominantly male, which can increase the likelihood of these offenses. Reports of mistreatment at unicorn start up Uber and fintech lender Sofi have brought the entire industry into the spotlight.2

At the crossroads of finance and technology are venture capital funds. These entities provide the seed capital and bridge financing for many tech startups early in their lifecycle. Companies need such funding before the can even get to the stage where they think about an initial public offering.

Unfortunately, accusations of sexual harassment have also targeted well-known VC funds Draper Fisher Jurvetson, Binary Capital and ‘500 Startups’, all based in Silicon Valley.3

In all, a staggering 60% of women in Silicon Valley reported unwanted sexual advances in the workplace.4 Of these, nearly 40% didn’t report the incidents for fear of retaliation.5 There is often fear of being black-balled in the industry or even countersued.

Sexual Harassment is a serious problem that needs to be dealt with immediately. But combatting the practice can be difficult.

Career in Enterprise Risk ManagementEnterprise Risk Management Challenges

Human Resources

Typically, when there is a sexual harassment incident, it gets reported to the human resources department who is supposed to serve as employee advocate. But some insiders say HR isn’t always on the side of the employee. According to a Bloomberg article, “[HR is] poorly equipped to handle serious workplace harassment claims.”6 The article takes the view that the department’s true ‘mission’ is to protect the company from litigation and will side usually with management.

In the case of Uber, the reports were dismissed by the HR department because the alleged perpetrator was too valuable to the company.7 At the Weinstein Company, HR reportedly referred cases to Harvey Weinstein himself.8 Other times, they are documented but never followed up.


Some organizations will do whatever it takes to keep sexual harassment incidents quiet. Often, when a woman reports a sexual harassment offense, other victims feel empowered to do the same. This can result in a class action lawsuit with significant reputational and monetary damage.

Companies know this, so many employees are forced to sign closed arbitration agreements as a condition of their employment. Generally, such agreements state that in the case of an offense, a third-party will review and rule on the case. They can also set the amount of damages if applicable.

Most importantly, arbitration agreements keep sexual harassment cases out of the courts, where media outlets can pick up on the story.

Non-Disclosure Agreements

Another way companies keep sexual harassment events quiet is through non-disclosure agreements, NDAs. Also known as confidentiality agreements, NDAs are presented to a victim when a monetary settlement is awarded. Unfortunately, NDAs may also allow the perpetrator to avoid criminal charges, if applicable.

Typically, these agreements mandate two things. First, any physical evidence of the sexual harassment (documents, photos, texts, voicemails, tapes, etc.) is to be destroyed.9 Second, the victim never speaks about the incident or disparages the perpetrator or company.10 Violating the NDA can lead to forfeiture of the award and potentially bring countersuit.11

Legal Roadblocks

There is also significant legal protection for the companies in a sexual harassment case. The Supreme Court made two decisions in the 1980’s which essentially state that “if a company can show it has taken steps to address and prevent harassment, it’s not liable for its employees’ behavior.”12 Often, basic compliance training for employees has provided adequate protection for the company.

If the case does make it to court, any evidence against an accuser must be obtained legally. This is a similar challenge facing forensic accountants or fraud investigators. While it’s a great break in the case to have a voice mail recording of harassment, if the phone was hacked or a device was hidden to obtain the recording it may not be admissible. In certain states, recording someone without their consent is illegal.

Moving Forward

Given all these loopholes for sexual harassers, it begs the question “does our current system actually protect employees?” Just the presence of such non-disclosure and arbitration agreements is rather cold and could send the wrong message-that valuing the almighty dollar above employee safety. This attitude needs to be changed.

If fiduciary standards are being raised for financial advisors perhaps management should be held to similar standards. We should consider the idea of managerial liability for ongoing harassment, similar to how a Chief Financial Officer is accountable for accurately representing the financial condition of the company in public SEC filings. These new concepts are sure to be explored in case studies moving forward at top business schools.

A Career in Enterprise Risk Management

If you are considering a career in finance with strong job security and generous compensation, consider enterprise risk management, ERM. According to employment site Glassdoor, enterprise risk managers enjoy an average base pay of $86,704 plus a bonus of nearly $12,000.13  Additionally, the demand for their services should only increase in the light of all the recent sexual harassment scandals. Companies are realizing the value of prescient managers who assess a wide variety of risks.

ERM addresses not just quantitative risks (such as leverage, Value-at-Risk or exposure to derivatives such as options, futures and swaps) but also legal, environmental, political and regulatory risks. While protecting against money laundering, supplier f or a cyber-attack, many risk managers miss a threat right under their noses, such as sexual harassment.

Master’s Degree in Enterprise Risk Management

Without a background in compliance or legal, risk management positions will be challenging to land. Consider pursuing a Masters in ERM. Studying this topic at a graduate level not only makes you a stronger candidate (not to mention a safer hire for the firm) it may position you for a leadership position down the road.

Johns Hopkins’ Carey School of Business offers an online Flexible MBA in Enterprise Risk Management degree. The program utilizes the latest technology when assessing risk including data analytics and scenario analysis. Further, Carey’s MS in ERM prepares students for crisis management; a topic not usually covered by online Masters in Finance or traditional MBA programs.

By earning your degree online, students can significantly reduce cost. This is a serious consideration when determining how to pay for your Masters degree. If the reports of sexual harassment have inspired you to take action, join the fight from the inside as an enterprise risk manager.





Sexual Harassment: A Risk Management Nightmare
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Sexual Harassment: A Risk Management Nightmare
On a human level, sexual harassment victims are often left traumatized. From a business standpoint, these scandals are risk manager’s nightmare.
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