In today’s edition of Daily Compliance News:
Author: admin
A 2015 New York Times article by Gretchen Morgenson, entitled “Ways to Put the Boss’s Skin In the Game”, dealt with a long-standing question about how to make senior executives more responsible for corporate malfeasance? Her article had direct application to compliance programs and compensation for senior management tied to compliance. Morgenson said the issue was “Whenever a big corporation settles an enforcement matter with prosecutors, penalties levied in the case – and they can be enormous – are usually paid by the company’s shareholders. Yet the people who actually did the deeds or oversaw the operations rarely so much as open their wallets.”
She went on to explain the economic phenomenon of “perverse incentives” wherein executives are encouraged to take excessive risk because they can profit so much from them, all the while knowing they probably won’t have to pay any fines or face other costly consequences of their actions. To help remedy this situation, the idea has come to the fore about senior managers putting some “skin in the game.
Three key takeaways:
- Perverse incentives are named that for a reason; they really are bad.
- How can you create positive incentives in your organization?
- There is a business response to the legal issue. Employ it.
Categories
#GWIC Wins
Welcome to the Great Women in Compliance Podcast, co-hosted by Lisa Fine and Mary Shirley. In this Episode 50, Mary Shirley and Lisa Fine sit down together for a very special episode.
After getting the chance to speak together about the best professional advice that listeners had ever received at the end of the year, Lisa and Mary received some great feedback from listeners. Some of the responses were about achievements of our community, and we took that feedback and decided to team up again in this latest episode which is all about celebrating in the “wins” experienced by listeners of the podcast who have taken the insight of our guests and people in the podcast community and moved their careers and/or professional development forward..
All of the feedback that Mary and Lisa receive, positive or negative, is important in developing the GWIC podcast and community. But there is nothing that brings more joy and pride than when they hear about how the podcast has resulted in favorable outcomes for their guests and listeners. This episode is a way to share that joy with all listeners and celebrate in the achievements of others. Because when one of us does well, collectively all of our boats rise.
Listen in to hear about the personal journeys of the listeners with the stories they have submitted and the feedback provided by guests. Lisa and Mary cap off the episode by sharing how hosting the podcast has touched each of their lives. You’ll also have the chance to hear how to snag yourself a huge Compliance Week professional development opportunity as one of the podcast’s valued listeners!
Join the Great Women in Compliance community on LinkedIn here.
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. In this episode we take a deep dive into recent Hogan Lovell’s report High Seas: Steering the Course II Navigating bribery and corruption risk in 2020. We conclude with a special tribute to Bernie Ebbers and his role in creating the modern compliance professional.
Some of the highlights include:
- What do the survey results say about the direction of compliance function spending?
- Can companies manage risks in emerging markets when compliance spending is decelerating?
- Technology can improve compliance efficiency but it can also improve compliance evasion.
- Will CCOs be able to interpret data from ComTech tools?
- What are the implications for the compliance discipline and CCO?
Resources
Hogan Lovell’s report High Seas: Steering the Course II Navigating bribery and corruption risk in 2020, click here.
Matt Kelly blog post, Compliance Resources Getting Tighter
In today’s edition of Daily Compliance News:
Ray Pathak is the COO of Nymity, which was recently acquired by TrustArc. He chats with Tom Fox about the acquisition and how his company is reimagining privacy.
A Powerful Combination
Nymity and TrustArc have been in the compliance space for a combined 40 years. Nymity has research expertise, and TrustArc is versed in automation and technology. The companies coming together with their complementary skills have created something powerful and special in the marketplace.
Reimagining Privacy
Tom asks Ray to expand on its catchphrase, ‘Reimagining Privacy’. It’s about providing data intelligence within the compliance solution, Ray responds, so that companies can do more with less. “We want to empower organizations to understand their data better and by understanding it, be able to do more with their data.” He calls this ‘unleashing the data’.
The wait-and-see approach used by so many companies is a failure waiting to happen, Ray argues. It may solve the problem of today, but it’s not viable long-term because you would have to start from scratch each time a new law comes out. He advocates a more proactive, take-control approach: build out a comprehensive privacy program so when a new law comes out you’re just tweaking your program instead of creating a whole new one.
Embedding four layers of research within their tools so that information is available to clients when they need it, makes Nymity’s solution different from other solutions on the market. Ray goes on to explain how this process brings privacy intelligence to their clients, saving them valuable time. Their comprehensive framework containing 139 different technical and organizational measures, grouped into 13 categories, and mounted to over 900 local and international laws allows clients using the framework to build out their data privacy program to comply with many laws.
Future Trends
Tom asks Ray to comment on the top issues in data privacy for 2020 and beyond. Ray responds that the first issue is the impact laws like CCPA will have. More states are coming out with privacy laws, likely to be more comprehensive than CCPA, he predicts. The second issue he talks about is making data privacy easier for people. Privacy is becoming more complex, but their privacy intelligence tool makes it more accessible for clients. Thirdly, he says that by combining technology with research, his company is helping to provide insights to organizations with their solution.
Resources
Nymity.com
TrustArc.com
Most compliance professionals understand the need to discipline employees who may have violated ethics and compliance programs or otherwise engaged in bribery and corruption. However, many Chief Compliance Officers (CCOs) and compliance practitioners do not focus as much attention to compliance incentives. I have developed six core principles for incentives, adapted from Spring 2014 MIT Sloan Management Review article, entitled “Combining Purpose with Profits”, and formulated them for the compliance function in an anti-corruption compliance program.
1. Compliance incentives don’t have to be elaborate or novel.
2. Compliance incentives need supporting systems if they are to stick.
3. Support systems are needed to reinforce compliance incentives.
4. Compliance incentives need a “counterweight” to endure.
5. Compliance incentive alignment works in an oblique, not linear, way.
6. Compliance incentive initiatives can be implemented at all levels.
Obviously, this list is not exhaustive. Yet it is now more important than ever that you demonstrate tangible incentives for your employees to gain benefits, both financial and hierarchical, through doing business ethically, in compliance with your own Code of Conduct and most certainly in compliance with relevant anti-bribery laws. It is also a requirement that such actions be documented so they can be demonstrated to the regulators, if they come knocking.
Three key takeaways:
- Compliance incentives do not have to be elaborate or novel.
- You must create support systems for your compliance incentives.
- Compliance incentives should be implemented at all levels.
From Vaudeville to the Silver Screen to the Small Screen, the Marx Brothers made an impact wherever people found them. Now Tom Fox and Mike Volkov have wedded their love of the Marx Brothers with their passion for compliance and bring them into the boardroom to help explain and explore the sometimes-chaotic world of governance, risk-management, ethics and compliance. In this episode they begin a three-part series where they discuss the movie A Night at the Opera and how it informs the 2019 in Compliance, FCPA enforcement actions and Compliance into 2020 and beyond. In this episode we put on our prognosticator’s turbans and looked into the veiled land of 2020 and beyond in compliance. Highlights from the podcast include:
1. Why data will become more important in compliance?
2. You have an ABC compliance program. What about Anti-Trust and Trade Compliance?
3. How do the OFAC Compliance Framework and Anti-Trust Division Guidance inform ABC compliance?
4. Where will compliance convergence go in 2020?
5. Will 2020 be the year of the ‘Ethical Edge’?
6. What will happen to FCPA enforcement numbers in 2020? What about individual prosecutions.
Resources
Mike Volkov-FCPA Predictions for 2020
Tom Fox–Compliance Insights for 2020 and Beyond
Marx Brothers-The Sanity Clause Scene–YouTube
In today’s edition of Daily Compliance News:
- Citgo 6 rearrested in Venezuela. (HoustonChronicle)
- Credit Suisse CEO fired for spying on subordinates. (FT)
- Top CitiGroup trader fired for stealing food from Canteen. (FT)
- Corporate CEO racially abuse Uber driver on tape, gets fired. (NYT)
