Today, business ethics depends on more than a code of conduct posted in the lobby. Across the nation, hundreds of companies have implemented in-house business ethics and compliance programs. These programs have clear and structured support from the board of directors and senior management and they are fully integrated into the organization. The ethics officer is in daily contact with those responsible for compliance, legal, internal auditing, finance, human resources, security, and business managers throughout the organization. Most importantly, today’s business ethics programs include ongoing risk assessments, practical training, and confidential company help lines for employees to ask questions and report wrongdoing.

Ignorance can be no excuse. It has been over a decade since the US Sentencing Commission described a seven-part model for ethics and compliance programs. Other governmental bodies including the US Departments of Justice and Health and Human Services, and the Environmental Protection Agency, have adopted this model in whole or in part. The US Supreme Court, in a series of cases, limited liability for companies that develop antiharassment compliance programs. Perhaps most significantly, in the 1996 Caremark case, the influential Delaware Chancery Court issued an opinion that directors who fail to ensure that their companies have effective compliance programs could be subject to personal civil liability. Finally, last month the New York Stock Exchange issued recommendations for new listing requirements that spoke repeatedly of the importance of business ethics and included specific recommendations.

Unfortunately, there are many examples of companies that have ignored the 10-year evolution of business ethics and have never taken the necessary steps to build an effective ethics and compliance initiative. It is ironic that Arthur Andersen one of the first accounting firms to establish an ethics consulting business in response to the sentencing guidelines, had never set up its own in-house ethics program.

Of course, we cannot know whether Arthur Andersen would be dissolving now if it had put an ethics program in place. But in many other cases we have seen how an ethics program can bring problems and questions to the surface before they get out of control.

We also know that under the 1999 guidelines for the Federal Prosecution of Corporations, the Justice Department would have had the option to reduce charges against the firm if Arthur Andersen had had an internal ethics and compliance program. A decision not to bring or to reduce criminal charges based on the presence of an ethics program is not uncommon. The Sears, Roebuck & Co. reaffirmation case is but one example. But even if charges are filed, an ethics program can reduce the ultimate penalties. There are dozens of companies that have negotiated reduced sentences because they had an ethics program in place and made good faith efforts to implement it.

Business ethics is no longer an academic matter, it is very much about the bottom line. If a corporate leader chooses not to address business ethics, he or she is increasing the risk of fines, penalties, the cost of litigation, the loss of reputation, and the defection of investors. The cost of creating a best practice program is low, given the risk of not doing so. Corporations with best practices are often willing to share what they have learned at conferences and through associations because they recognize that everyone gains when there is trust in the marketplace. The Ethics Officer Association, for example, with more than 800 managers of ethics and compliance programs, regularly facilitates peer-to-peer sharing of what’s working.

Taking a new look at a company’s commitment to business ethics is not only the smart thing to do in terms of a corporate leader’s job security, it is also the right and necessary thing to do. Today, there is no more critical responsibility for corporate leaders than to affirm that their organizations have kept up with business ethics best practices, are fully aware of recent developments, and are doing everything that can be done to act in accordance with the highest standards of ethics, integrity, and compliance.

Edward S. Petry is executive director of the Ethics Officer Association, an international nonprofit association based in Belmont, MA whose members represent more than half of the Fortune 100.