Day: September 13, 2023

Categories
Riskology

Infortal on Global Risk Outlook: Part 3 – Dr. Ian Oxnevad on Russia and Ukraine

“If you’re fighting off a major world power, corruption will not be on your plate. You’re going to be looking at trying to keep domestic production up and national solidarity at high levels,” says Dr. Ian Oxnevad, returning guest on this installment of the Riskology special series. Dr. Ian Oxnevad and Tom discuss the geopolitical risk landscape between Russia and Ukraine.

Dr. Ian Oxnevad is the Director of Geopolitical Risk Intelligence for Infortal Worldwide, with a background in political science and national security studies. He is also the host of The Riskology Podcast.

You’ll hear Ian and Tom discuss:

  • The impact of the Russia-Ukraine war, as well as the implications counteroffensive measures may have on both countries. 
  • Companies may face risks in doing business with Russia as they violate sanctions. Ian also discusses the proxy war between Russia and the West and between China and the West.
  • The shrinking European economy is due to higher energy costs and the impact of food supplies in other parts of the world. 
  • The risks of corruption in Ukraine.
  • How China is playing a role in filling the void left by Western investment and the need for due diligence in the post-war business landscape
  • There is potential for a “rush” of people and companies looking to capitalize on the efforts to rebuild Ukraine. This can present a potential risk in terms of corruption for Ukraine.

Resources

Infortal Worldwide | Email | Tel: 1.800.736.4999 | Podcast

Categories
Data Driven Compliance

The Uses of Data Driven Compliance: Part 3 – Making the Business Case for Data Driven Compliance

Welcome to Data Driven Compliance. In this podcast, we discuss how to use data to improve and enhance the effectiveness of your compliance program, creating greater business efficiency, all leading to more return on investment for your compliance regime. Join host Tom Fox as he explores how data will drive your compliance program to the next level. This podcast is sponsored by KonaAI.

I recently had the opportunity to visit with Vince Walden, founder and CEO of KonaAI, for a podcast series on the uses of data driven compliance. Over these five podcasts, we will discuss generative AI and ChatGPT in compliance, the profiles of a corrupt payment, making the business case for data-driven compliance, what to ask for and how to ask for it, and some success stories. Part 3 discusses how to make the business case for data-driven compliance.

Vince Walden, a seasoned professional with over 25 years of experience in compliance and risk management, is the founder and CEO of KonaAI, a software company specializing in automating data management for compliance and fraud risk management. Walden believes that compliance professionals play a crucial role in data-driven risk management. He emphasizes the need for these professionals to make a business case for data-driven compliance to both risk professionals and the CFO or head of operations.

According to Walden, data-driven compliance not only aligns with regulatory expectations and avoids risks, but it also improves the overall functioning of the business by identifying hidden money, reducing costs, eliminating waste and fraud, and preventing improper payments. His perspective is shaped by his extensive experience in the field, including his work as a consultant, fraud investigator, and forensic technologist. Join Tom Fox and Vince Walden as they delve deeper into this topic on this episode of Data Driven Compliance.

Key Highlights:

  • The Importance of Data Driven Compliance
  • Effectively Conveying Compliance Value to CFOs
  • The Impact of Data Driven Compliance
  • Maximizing Compliance ROI through Risk Mitigation

Resources:

Connect with Vince Walden on LinkedIn

Check out Kona AI

Connect with Tom Fox on LinkedIn

Categories
31 Days to More Effective Compliance Programs

One Month to More Effective Written Standards: Day 7 – Policies and Procedures

There are numerous reasons to put some serious work into your compliance policies and procedures. They are certainly a first line of defense when the government comes knocking. The 2020 Update made clear that “Any well-designed compliance program entails policies and procedures that give both content and effect to ethical norms and that address and aim to reduce risks identified by the company as part of its risk assessment process.”

This statement made clear that the regulators will take a strong view against a company that does not have well-thought-out and articulated policies and procedures against bribery and corruption, which are systematically reviewed and updated. Moreover, having policies written out and signed by employees provides what some consider the most vital communication layer and acts as an internal control. Together with a signed acknowledgment, these documents can serve as evidentiary support if a future issue arises. In other words, the “Document, Document, and Document” mantra applies just as strongly to policies and procedures in anti-corruption compliance.

The specific written policies and procedures required for a best practices compliance program are well-known and long-established. According to the 2020 FCPA Resources Guide 2nd edition, some of the risks companies should keep in mind include the nature and extent of transactions with foreign governments (including payments to foreign officials), use of third parties; gifts, travel, and entertainment expenses; charitable and political donations; and facilitating and expediting payments. Policies help form the basis of expectations for standards of conduct in your company. Procedures are the documents that implement these standards of conduct.

Three key takeaways:

1. Written compliance policies and procedures, together with the Code of Conduct, form the backbone of your compliance program.

2. The DOJ and SEC expected well-thought-out and articulated compliance policies and procedures to be adequately communicated throughout your organization.

3. Institutional fairness for the application of policies and procedures demands the consistent application of your policies and procedures across the globe.

For more information, check out The Compliance Handbook, 4th edition, here.

Categories
Blog

Geopolitical Risks and Business Opportunities: Part 3 – Russia and Rebuilding Ukraine

I recently had the opportunity to visit with Dr. Ian Oxnevad, Director of Geopolitical Risk Intelligence at Infortal Worldwide. Global Risk Review, a podcast series that Infortal Worldwide sponsors was the reason for this visit. Dr. Oxnevad is a seasoned expert in geopolitical risk intelligence, with a Ph.D. in political science and a master’s degree in National Security Studies.

Over this five-part blog series, we will look at the risk profile for US Companies doing business in the following geographic regions: the Middle East, Latin America, Russia and Ukraine, Africa, and the Asia Pacific region. Over this five-part blog post series, we will review Dr. Oxnevad’s views in each one of these regions. Part 3 reviews the business opportunities and risks in Russia and the challenges and opportunities in rebuilding Ukraine.

Dr. Oxnevad deeply understands the issues in Russia and Ukraine. His belief that the upcoming rebuilding of Ukraine will spark a surge of interest from significant US corporations, the EU, and China, potentially resulting in increased corruption and geopolitical risks, shapes his perspective on the global implications and geopolitical risks. Oxnevad emphasizes the need for ongoing due diligence and monitoring by Western companies to navigate potential challenges and uncertainties, such as changes in laws and competition from different countries. He also acknowledges the significant risk of corruption in Ukraine, especially during the rebuilding process, and believes it may take time for EU institutions to mitigate this risk.

The war between Russia and Ukraine has had far-reaching consequences, not only for Europe but also for other parts of the world. Indeed, it has changed business across the globe forever.

One of the key factors to consider is the impact on global food supplies. Russia and Ukraine are major food and grain suppliers, and the war and sanctions have disrupted their production. This has put food supplies at risk, increasing food costs and inflationary pressures worldwide. Countries in Africa and the Middle East, in particular, heavily rely on these food supplies, and the uncertainty surrounding Ukraine’s ability to meet these demands raises concerns.

The rebuilding of Ukraine presents significant opportunities for major corporations from the United States, the European Union, China, and other countries. However, it also raises concerns about corruption and geopolitical risks. Ukraine has been traditionally viewed as a high-risk country for corruption, and the war has only exacerbated this issue. The chaos and emergency in the country create a greater incentive for corruption to exist. President Zelensky’s ability to address these concerns remains to be determined, and it is unlikely that corruption will disappear even if the war were to end abruptly.

From a geopolitical standpoint, the war between Russia and Ukraine has become a proxy war between Russia and the West and China and the West. This further complicates the situation and introduces additional risks. The resolution of the war and the lifting of sanctions will depend on various factors, including Russia’s political landscape and the leadership of President Putin. If Putin remains in power, the sanctions will likely stay in place. However, if there is a change in leadership, lifting sanctions could be a possibility, albeit with careful consideration of Russia’s economic and political landscape.

The rush to capitalize on Ukraine’s rebuilding presents both opportunities and risks. Many countries and corporations will be vying for a stake in Ukraine, increasing the incentives for corruption and other geopolitical risks. Competitors will be aware of the presence of different countries, further complicating the situation. It is crucial for American companies and others to carefully assess the risks associated with corruption in Ukraine and conduct thorough due diligence before engaging in business opportunities.

The international community, including the European Union, NATO, and the United Nations, may play a role in assisting Ukraine in its rebuilding efforts. Establishing the rule of law, policies, and procedures will ensure a successful reconstruction. However, the timing of international involvement is crucial. Rebuilding efforts must occur before existing EU institutions move in to address corruption, as this will help mitigate the associated risks.

In conclusion, rebuilding Ukraine has significant global implications and geopolitical risks. The disruption of food supplies, the rush to capitalize on opportunities, and the challenges associated with corruption must be carefully considered. The resolution of the war and the lifting of sanctions depend on various factors, including Russia’s political landscape. International assistance in rebuilding efforts, particularly in establishing the rule of law, will be crucial. However, it is essential to conduct thorough due diligence and assess the risks before engaging in business opportunities in Ukraine.

Please join us tomorrow when we explore geopolitical risks and business opportunities in Europe.

You can check Dr. Oxnevad in the full five-part Riskology podcast series here.

Categories
Daily Compliance News

Daily Compliance News: September 13, 2023 – The Dirty Deeds Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance brings to you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen in to the Daily Compliance News. All, from the Compliance Podcast Network. Each day we consider four stories from the business world, compliance, ethics, risk management, leadership, or general interest for the compliance professional.

  • Businesses should disclose China risks. (WSJ)
  • DOJ ramps up National Security enforcement resources. (WSJ)
  • No timeline for climate disclosure from SEC. (WSJ)
  • New pod on corruption. (Dirty Deeds)
Categories
Compliance Into the Weeds

Compliance into the Weeds: Failure to Have Effective Compliance Program

The award winning, Compliance into the Weeds is the only weekly podcast which takes a deep dive into a compliance related topic, literally going into the weeds to more fully explore a subject. Looking for some hard-hitting insights on sanctions compliance? Look no further than Compliance into the Weeds! In this episode, Tom and Matt consider the recent DOJ enforcement action involving Verizon Business Network Services for failure to have an effective cyber security compliance program.

The recent case of Verizon’s non-compliance with cybersecurity standards and subsequent remediation efforts has sparked a significant conversation in the realm of cyber compliance. Tom views this case as a roadmap for companies to enhance their cybersecurity programs, emphasizing the importance of gap analysis and pressure testing. He draws parallels between cybersecurity compliance and the Foreign Corrupt Practices Act (FCPA) compliance, suggesting that Verizon’s case could serve as an example for other companies.

Matt applauds Verizon’s voluntary self-disclosure and extensive remediation efforts. He underscores the importance of disclosure, cooperation, and remediation in both cybersecurity and corruption cases, viewing Verizon’s actions as a positive example for other companies. Join Tom Fox and Matt Kelly as they delve deeper into this topic in the latest episode of the Compliance into the Weeds podcast. 

Key Highlights

·      Verizon’s Cybersecurity Program Failures

·      Enhancing Cybersecurity Compliance through Remediation Measures

·      Automating Compliance Efforts with GRC Tools

·      Potential Penalties for Non-Disclosure of Cybersecurity Issues

 Resources

Matt in LinkedIn

Matt on Radical Compliance

Tom 

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Categories
Blog

Making the Business Case for Data Driven Compliance

I recently had the opportunity to visit with Vince Walden, founder and CEO of KonaAI, for a podcast series on the uses of data driven compliance. KonaAI is the sponsor of those podcasts. This blog post series will flesh out the podcast show notes. Over the next five blog posts, we will discuss generative AI and ChatGPT in compliance, the profiles of corrupt payments, making the business case for data-driven compliance, what to ask for and how to ask for it, and some success stories. Part 3 will discuss making the business case for data-driven compliance.

Vince Walden, the CEO and founder of KonaAI, is here with me as always. Walden pointed out a dual aspect to this, bringing risk and financial perspectives into play. The risk perspective aligns with meeting expectations from the Department of Justice, SEC, or other regulatory bodies, which include culture alignment and prudent data handling. The financial end deals with a knock-on effect of compliance: a potential improvement in financial performance by curtailing revenue leakage through fraud and improper payments. This is what compliance professionals do every day. In regulated industries, however, it is not simply about convincing others of the necessity. It is also about aligning the company’s tools and methods to meet the expectations of external regulatory bodies. In an ideal world, a company’s compliance goals should align with its business goals. But achieving this balance is easier said than done.

While regulatory compliance is important, businesses are about generating revenue and turning a profit. Balancing compliance with profitability can often seem like a tightrope walk. But businesses need to realize that this balance is possible and beneficial in more ways than one. Compliance and profitability could coexist with the help of a business-savvy compliance tool. Compliance professionals need to distance themselves from a narrow focus on policies and enforcement. A broader perspective, including understanding the importance of data-driven metrics and business context, can position these professionals as valuable contributors to an organization’s bottom line. Yet Walden warned against complacency, saying that professionals who only focus on regulation and leave the business aspect by the wayside can find themselves marginalized.

Increasingly, companies realize the value of having multiple perspectives at the decision-making table. While finance and internal audit have always been pivotal, including compliance in these discussions provides a more rounded view. This broad-based approach can unlock novel insights into operational efficiency, risk mitigation, and more. The dialogue between compliance, finance, and procurement has been improving. Industries like telecommunications, oil and gas, technology, and pharmaceuticals are leading this change, recognizing the value of integrated discussions. Vince stresses the need for transparency in transactions that pose risks to the organization and sees compliance professionals playing a significant role in these discussions.

One of the greatest challenges of being a compliance professional is speaking the language of the CFO and financial stakeholders. Convincing them about the monetary benefits of compliance involves more than just throwing around regulation jargon – it requires the ability to present your case strategically. Compliance professionals understand their audience and tailor their discussions accordingly. He advises professionals to focus on how data-driven compliance can save money, improve efficiencies, and prevent improper payments. This is how to get the CFO and other financial stakeholders on board and win them over with the business case for compliance.

Walden emphasizes the importance of understanding the CFO’s financial language to argue for effectively implementing data-driven compliance. Compliance professionals must demonstrate the return on investment and the success of compliance and fraud risk management programs. Key performance indicators such as dollar recoveries and risks avoided can be used to measure the impact of data-driven compliance. Walden also highlighted the significance of finding hidden money and stopping improper payments before they occur. By utilizing data-driven metrics, compliance professionals can identify the riskiest transactions and prevent fraud, waste, and abuse. This not only aligns with the DOJ’s expectations but also improves the overall functioning of the business.

Also of significance is the role of compliance professionals in finance and procurement. More and more companies are recognizing the need to have compliance professionals at the table when making financial decisions. Compliance professionals must be able to speak the language of CFOs and help them understand the importance of compliance in reducing costs, eliminating waste, and preventing improper payments.

To make a compelling business case, compliance professionals should focus on the financial benefits of data-driven compliance. For example, if a company disburses hundreds of millions or billions of dollars in accounts payable payments to third parties, implementing a risk scoring system can help identify the top ten riskiest transactions at risk for fraud, waste, and abuse. The company can recover millions of dollars by investing a relatively small amount, such as $200,000, resulting in a significant return on investment.

It is also important for compliance professionals to collaborate with finance, procurement, and internal audit teams. The Association of Certified Fraud Examiners (ACFE) and COSO collaborated on writing the COSO Fraud Risk Management Guide, which offers useful advice for running a fraud risk management program. The principles outlined in this guide align with the DOJ’s guidance on effective compliance programs. Compliance professionals should take the initiative to engage with CFOs, heads of accounting, and heads of internal audit to foster collaboration and ensure compliance efforts are aligned with overall business objectives.

Compliance professionals play a vital role in data-driven risk management. By making a compelling business case for data-driven compliance, they can demonstrate the financial benefits, such as preventing fraud, improving cash flow, and uncovering hidden funds. Collaboration with CFOs and other key stakeholders is crucial to ensure compliance efforts are integrated into overall business strategies. Compliance professionals must continue to adapt and evolve their understanding of finance and procurement to effectively communicate the importance of data-driven compliance in mitigating risks and driving business success.

Finally, remember that data-driven compliance can improve financial performance and ROI. By harnessing the power of data to inform compliance activities, professionals in regulated industries can effectively navigate complex regulatory landscapes, minimize risks, and optimize business operations. The steps in making a business case for data-driven compliance lay the foundation for success, enabling professionals to leverage data insights, drive informed decision-making, and, ultimately, drive better business outcomes. Embrace data-driven compliance and unlock the potential for improved financial performance and ROI—within your reach.

 Resources:

Connect with Vince Walden on LinkedIn

Check out KonaAI

Connect with Tom Fox on LinkedIn