How do you deal with having a leader who runs a public corporation?
Scenario: So you have a superstar CEO who is hyper-intelligent, dynamic, disruptive, and indeed uber-famous, and that person can bend the wind to his will, or so he thinks. Unfortunately, he also thinks rules and regulations like the SEC, disclosure, and financial statements are only for mere mortals, of which he is not one. He routinely makes questionable statements that drive his share price up and down. He also threatens employees with termination on the spot for those who don’t meet his rigorous work standards, even though the company has a written due process policy that H.R. has implemented.
As a compliance professional, how can you create a structure and work with a CEO who has an over-the-top personality and protect the company and work with that going forward? How do you utilize your Board of Directors? And other than perhaps giving your resignation or not taking the job to start with, — where might you start?
Key takeaways in the episode:
✔️ Why some great founders of disruptive companies struggle to transition into becoming mature corporate leaders. We run through several scenarios of a cult of personality with CEOs that started long before the technology boom and how leaders sometimes have destructive impulses that hurt their corporation?
✔️ Visionaries need practical people who know the rules, controls, and laws to run a company successfully. Kortney Nordrum, Regulatory Counsel & Chief Compliance Officer, states that a company will crumble without both. As compliance professionals, it is our job to rein it when all creative people don’t necessarily understand the rules they have to live by.
✔️ The Board of Directors’ job is to protect the company. If the CEO is a liability or presents insurmountable risks, that will ultimately fall on the board’s shoulders. Leverage your independent directors because, at the end of the day, the Board is the boss of the CEO.
✔️ Assess who is under the spell of the CEO? Is it internal, or is it external? If people are so bought into the person that they agree to whatever he says, it’s an internal culture issue. Ensure that some people are keeping perspective and monitoring controls are being enforced.
✔️ Why startups should institute internal controls early. As soon as you start employing people and go through hiring and payroll processes, that’s when you have to start caring about compliance and ensuring you have internal control structures to support what you’re building.
✔️ Culture trumps everything. Whether you’re working for a very charismatic disruptor CEO or a conservative CEO, the company’s culture should be one of compliance. If it’s not, then as a compliance professional, it’s your job to try to establish that.
✔️Even if you work for a disruptive leader, a high-flying, uber technologically savvy person, if they still respect you and your work, that’s key in leadership. In business, there are many negotiables, but it is imperative not to lose sight of being a decent human being and respecting others — that’s the one non-negotiable.
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Welcome to SURVIVE AND THRIVE, the newest addition to the Compliance Podcast Network. This is a podcast where we unpack compliance, crisis disasters and walk you through all the red flags which appear, and give you some lessons learned going forward. This show is hosted by Compliance Evangelist Thomas Fox and Kortney Nordrum, Regulatory Counsel & Chief Compliance Officer, Deluxe Corporation.
Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.
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Tracy Manning is the Director of Financial Crime at LexisNexis Risk Solutions, and is Tom Fox’s guest this week on this episode of the Innovation In Compliance Podcast. She is a digital identity and financial crime expert, and currently leads the Commercial Strategy and Product Innovation for Financial Crime Market at LexisNexis. In this episode, Tracy and Tom are discussing the growth of digital transactions in the past year and what issues it may pose for compliance.
The Growth of Digital Transformation
Tracy remarks that the pandemic spurred digital growth, especially digital transactions. Digital commerce grew 44% last year, and its rate of acceleration is about five to seven years ahead. She adds that surveys show that these trends will not reverse, even as the world reverts to pre-pandemic environments.
Greater the Explosion, Greater the Risk
“With this explosion obviously we have greater opportunities, but I think perhaps greater risk,” Tracy says. While the vast growth of digital transformations is a plus and makes for greater opportunities for companies with respect to data, it also poses greater risks. Criminals have found new ways and schemes for evading financial crime control. Tracy explains key ways they leverage the anonymity of these faceless transactions. She adds that the onus is on companies to protect consumer data from these bad actors.
Key Questions & Guidance
Now that businesses are physically reopening, Tom asks Tracy to share some advice LexisNexis gives to companies. Tracy explains that companies are stumped on how they can transform their processes to better identify financial crime risk, create better customer experiences, and meet the emerging regulatory requirements. She adds that the most important challenge companies seek help with is achieving all these simultaneously. LexisNexis counsels these companies to keep their eyes on recent enforcement and newly published guidance due to the emergence of new threat schemes. It’s also important for companies to have a tool that can effectively meet regulatory demands, which can also create an improved customer experience. “Looking at digital identity is very, very critical…Digital evasion requires digital solutions,” she tells Tom.
What’s Next
As digital transactions evolve, Tracy stresses that companies need to evolve their compliance for this new digital normal by applying additional layers of digital identity intelligence within their organizations in a multi-layered approach. “An additional layer of digital identity intelligence is absolutely key to optimizing the customer experience…It can potentially allow you to identify good trusted customers and expedite their experience,” Tracy tells Tom. She adds that to fight financial crime, as well as having an additional layer of digital identity, companies need to have networks of their own.
Resources
Tracy Manning | LinkedIn | Twitter
Categories
Data Transfers into the UK
Following the EU’s adoption of Adequacy Decisions that the Kitchen covered in a prior episode, the UK’s Department for International Trade issued an updated guidance on data transfers into the UK. The Kitchen takes a look at the guidance that points to sources on data transfers, IP, copyright and data protection both coming into and leaving the UK.
In this episode of Greetings and Felicitations, I am joined by Astrophysicist and Healthcare Futurist Ben Locwin. In this podcast we consider the TOS episode Mirror Mirror as a starting point for the consideration of the science around the transporter.
In this episode, a landing party Kirk, McCoy, Scotty, and Uhura beams back up to the Enterprise. Interference from an ion storm, however, causes them to be transported into a parallel universe and a mirror image Enterprise. Now aboard the Imperial Starship Enterprise, the landing party discovers crew members who are mirror images of themselves and belong to an evil Federation known as the Empire. Their first experience is the torture of transporter operator Mr. Kyle with an agonizer for his alleged failure to beam the landing party up quickly enough. Immediately, Kirk realizes that a mirror image landing party must have been beamed aboard the real U.S.S. Enterprise.
Kirk, Uhura, McCoy, and Scotty impersonate their mirror image counterparts while finding a way to return to their universe. When Kirk and the party return, they find that their Empire counterparts were immediately recognized and put in detention. The Enterprise’s crew attributes this to the fact that it is easier for logical men to appear barbarous than for barbarous men to appear civilized.
Highlights include:
- Quantum transportation of information.While we cannot yet teleport, we can recreate.
- How does the telegraph signal explain this science used in Star Trek?
- What about the radio signals from the Apollo moon flights?
Laura Tulchin is ESG Solutions Lead at Exiger. Her role involves ensuring that the company’s products and services provide comprehensive coverage of ESG risk. She tells Tom Fox that more and more companies are focusing on ESG as part of their mainstream risk management programs. She joins Tom in this episode of the ESG Report to talk about doing ESG right by managing risk and value generation.
Getting ESG Right
“Where we get ESG right, we have the potential to have decades of positive impact on the world around us,” Laura tells Tom. ESG is having a moment now, she says, so now is the time to take the steps necessary to move the industry forward. Getting that right will have a lasting impact. She and Tom discuss global and local advancements in ESG regulations. US regulators are getting serious about ESG, Laura says. She talks about the SEC Enforcement Task Force as well as the ESG Disclosure and Simplification Act. This demonstrates that regulators want companies to back up their ESG claims with real data.
The Need for Standardization
There are multiple ESG reporting mechanisms existing today, Laura tells Tom. This causes fragmentation and is costly and ineffective. Also, she argues, it “allows companies to choose the reporting standard that might make them look the best from an ESG perspective.” For this reason, five of the leading standards setters have agreed to work together on a comprehensive standardized ESG reporting system. She acknowledges that no one system will perfectly cover every ESG situation, but standardization is an important first step. Tom asks why she thinks companies are pushing back against standardization. They’re mostly worried about the legal ramifications, she responds. “ESG is so impactful,” she remarks, “that if we don’t have a single benchmark it makes it really difficult for consumers, for investors, for risk managers, for compliance people to really understand ESG risks as well as the potential for ESG value generation.” Ultimately, ESG risk needs to be balanced with ESG performance to measure net impact, Laura says. That’s where the industry is going.
The G in ESG
Tom asks Laura to share her thoughts on the recent Exxon case. Should there be more focus on the G in ESG? “Good governance should ultimately lead to strong environmental practices and strong social engagement,” Laura agrees. The Exxon case demonstrates that going forward, companies need to engage shareholders and stakeholders, even though their views on ESG issues may be different. These changes are here to stay, she argues. Forward-thinking companies will try to understand ESG net impact and craft programs that respond to these types of actions.
Resources
Laura Tulchin on LinkedIn
Exiger on Website | LinkedIn
In this Episode of the FCPA Compliance Report, I am joined by Cristina Revelo. Cristina got a PhD in Compliance working at KPMG on the Wal-Mart account and later went in-house at Wal-Mart. She has a great story about how on the job training has given her a PhD in Compliance. She is now Deputy Director, Corporate Monitoring and Compliance Services at Affiliated Monitors, Inc. Highlights include:
- Her undergraduate career at University of Illinois and degrees in accounting.
- Her work at KPMG.
- What was it like moving over to Wal-Mart.
- What it was like doing compliance at the world’s largest retailer.
- Her current role at Affiliated Monitors.
Resources
Cristina Revelo Profile on LinkedIn
Affiliated Monitors
The Compliance Handbook
In today’s edition of Daily Compliance News:
- Do GenZs want to end email?
- Palestinian Authority and corruption.
- NRA and Bankruptcy fraud.
- FAQs on Biden EO.
In today’s edition of Sunday Book Review:
Categories
From Russia With Love
The Kitchen looks at what has been cooking in the Russia’s Prosecutor General’s office as they add several more foreign NGOs to its “undesirable entity” list.