How can companies navigate the evolving compliance landscape and new risks posed by geopolitical events? Dr. Ian Oxnevad and Chris Mason discuss the recent DOJ guidance on compliance priorities and tips for managing risk. Businesses face a growing array of geopolitical risks, such as sanctions regimes, political instability, and supply chain disruptions. These risks can have a significant impact on a company’s bottom line, reputation, and overall operations. To effectively mitigate these risks, companies must adapt their compliance programs and develop a comprehensive understanding of the evolving geopolitical landscape.

Infortal Worldwide is a global risk management and investigations firm that specializes in helping businesses navigate complex risk landscapes. The company’s focus extends to various areas, including economics, politics, and geopolitical risk. By delving into these interconnected realms, Infortal Worldwide aims to provide clients with comprehensive insights that empower them to make informed decisions, especially in critical areas such as mergers and acquisitions, private equity investments, and other strategic moves.

You’ll hear Chris and Ian discuss:

• The DOJ is making enforcement of corporate compliance a top priority, especially relating to national security. They are hiring 25 additional prosecutors specifically for this purpose.
• Compliance programs must evolve to address today’s complex geopolitical risks. Programs can’t be static or analyzed just annually. There must be dynamic assessment as global conditions change.
• Sanctions and regulations have cascading impacts on markets and business operations in ways that may not seem directly related. Thorough analysis of geopolitical risks is required.
• Compliance failures at large, sophisticated companies demonstrate the need for effective geopolitical risk management. Significant reputational damage can occur.
• Ensure executive compensation packages properly incentivize compliance-minded behavior. Penalties should exist for compliance failures.
• New DOJ Safe Harbor policy formalizes practices for self-disclosing issues found during mergers and acquisitions. 
• For M&A, extensive due diligence should begin on day one of deal consideration. Analysis must include geopolitical risks like bribery and FCPA violations.
• Due diligence should continue for 6 months after an acquisition closes to uncover hidden risks. Issues should be self-disclosed to the DOJ.
• Compliance must permeate entire organizations. New expertise in geopolitical risk may need to be developed across legal, marketing, and other departments.
• Corporate compliance plays a role in national security by avoiding risks like products being misused by terrorists or transactions violating sanctions.

KEY QUOTES

“…the last thing that the Department wants to do is discourage companies with effective compliance programs from lawfully acquiring companies with ineffective compliance programs and a history of misconduct. Instead, we want to incentivize the acquiring company to timely disclose misconduct uncovered during the M&A process.” – Chris Mason

“Your company is an element to sociopolitical and geopolitical stability. And unfortunately, the world has gotten so complex and so potentially dangerous, although there’s tons of opportunities to be had, that it really behooves companies to look at deals and partnerships and risks before they act in any given transaction, but also after the fact in order to rectify risks.” – Dr. Ian Oxnevad

“Just the risk environment in general now are forcing companies to have to build new skills and potentially new personnel and areas of expertise where they would not have had to before now, because of the executive liability. Executives certainly have an incentive now by law or at least by enforcement, to understand geopolitical risk… So you’re looking at the creation of a whole new area of expertise and demand within the compliance space and in the corporate space in general in terms of how to understand geopolitical risk.” – Dr. Ian Oxnevad

Resources

Infortal Worldwide 

Dr. Ian Oxnevad on LinkedIn

Chris Mason on LinkedIn