Tag: Boards

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Compliance Into the Weeds

Compliance into the Weeds: What Are Boards Doing About AI (Hint: Not Much)

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 compliance? Look no further than Compliance into the Weeds! In this episode, Tom and Matt look into corporate reports on their Boards’ oversight of AI.

As the world ventures deeper into the age of artificial intelligence (AI), the issue of corporate governance over AI is emerging as a crucial point of discussion. Tech giants such as Google are facing demands for more board-level attention to AI risk management due to concerns about the lack of transparency and oversight.

Tom highlights this lack of detailed consideration of AI at the board level, raising doubts about whether boards are suitably prepared for AI’s rapid development and potential enforcement risks. His concerns are rooted in limited mentions of AI in proxy statements of S&P 500 companies, suggesting current practices might not be sufficient for the future.

Meanwhile, Matt emphasizes the need for boards to start considering staffing, expertise, and risk management related to AI without necessarily forming dedicated AI committees at present. Kelly’s concerns stem from the lack of detail in proxy statements about what boards are currently doing with AI, especially in tech-heavy companies like Google, indicating the need for potential formation of dedicated committees or sub-specializations in the future.

 Key Highlights:

  • AI Risk Management: Tech vs. Non-Tech Perspectives
  • Enhancing Corporate Governance Through AI Oversight
  • Technology Risk Oversight in Evolving Companies
  • AI Oversight for Corporate Boards: Future Risks

Resources:

Matt on Radical Compliance

 Tom 

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Corruption, Crime and Compliance

Board Oversight and Monitoring of AI Risks

As companies rapidly adopt artificial intelligence (AI), it becomes paramount to have robust governance frameworks in place. Not only can AI bring about vast business benefits, but it also carries significant risks—such as spreading disinformation, racial discrimination, and potential privacy invasions. In this episode of Corruption, Crime and Compliance, Michael Volkov dives deep into the urgent need for corporate boards to monitor, address, and incorporate AI into their compliance programs, and the many facets that this entails.

You’ll hear Michael talk about:

  • AI is spreading like wildfire across industries, and with it comes a whole new set of risks. Many boards don’t fully understand these risks. It’s important to make sure that boards are educated about the potential and pitfalls of AI, and that they actively oversee the risks. This includes understanding their obligations under Caremark, which requires them to exercise diligent oversight and monitoring.
  • AI is a tantalizing prospect for businesses: faster, more accurate processes that can revolutionize operations. But with great power comes great responsibility. AI also comes with risks, like disinformation, bias, privacy invasion, and even mass layoffs. It’s a delicate balancing act that businesses need to get right.
  • Companies can’t just use AI, they have to be ready for it. That means adjusting their compliance policies and procedures to their specific AI risk profile, actively identifying and assessing those risks, and staying up-to-date on potential regulatory changes related to AI. As AI grows, the need for strong risk mitigation strategies before implementation becomes even more important.
  • The Caremark framework requires corporate boards to ensure that their companies comply with AI regulations. Recent cases, such as the Boeing safety oversight, demonstrate the severity of the consequences when boards fail to fulfill their responsibilities. As a result, boards must be proactive: ensure that board members have the technical expertise necessary, brief them on AI deployments, designate senior executives to be responsible for AI compliance, and ensure that there are clear channels for individuals to report issues.

 

KEY QUOTES

“Board members usually ask the Chief Information Security Officer or whoever is responsible for technology [at board meetings], ‘Are we doing okay?’ They don’t want to hear or get into all of the details, and then they move on. That model has got to change.”

 

“In this uncertain environment, stakeholders are quickly discovering the real and significant risks generated by artificial intelligence, and companies have to develop risk mitigation strategies before implementing artificial intelligence tools and solutions.”

 

“Board members should be briefed on existing and planned artificial intelligence deployments to support the company’s business and or support functions. In other words, they’ve got to be notified, brought along that this is going to be a new tool that we’re using, ‘Here are the risks, here are the mitigation techniques.’”

 

Resources:

Michael Volkov on LinkedIn | Twitter

The Volkov Law Group

Categories
31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program with Boards – OIG Guidance for Boards Regarding Compliance

The OIG white paper “Practical Guidance for Health Care Governing Boards on Compliance Oversight” (OIG Guidance), provides an excellent road map for thinking about how to structure a Compliance Committee for your Board and a Board’s obligations. As an introduction, the OIG Guidance states that a Board must act in good faith around its obligations regarding compliance. This means that there must be both a corporation information and reporting system and that such reporting mechanisms provide appropriate information to a Board. It states: The existence of a corporate reporting system is a key compliance program element, which not only keeps the Board informed of the activities of the organization but also enables an organization to evaluate and respond to issues of potentially illegal or otherwise inappropriate activity.

The OIG Guidance sets out four areas of Board oversight and review of a compliance function:

  1. Roles of, and relationships between, the organization’s audit, compliance, and legal departments;
  2. Mechanism and process for issue-reporting within an organization;
  3. Approach to identifying regulatory risk; and
  4. Methods of encouraging enterprise-wide accountability for the achievement of compliance goals and objectives.

The OIG Guidance is an excellent review for not only compliance professionals and others in the healthcare industry but a good primer for Boards around their duties under a best practices compliance program. The U.S. Sentencing Guidelines, the Hallmarks of an Effective Compliance Program, the OIG Guidance, and OIG Corporate Integrity Agreements can be used as baseline assessment tools for Boards and management in determining what specific functions may be necessary to meet the requirements of an effective compliance program.

Three key takeaways:

  1. Information flow up to the Board is critical.
  2. Compliance should be institutionalized in your company as a way of life.
  3. A Board needs to consider all risks.

For more information check out The Compliance Handbook, 3rd edition, available from LexisNexis here.

Categories
Principled Podcast

S9 E8 – Under Pressure: How Boards are Facing Today’s Global, Regulatory Issues

What you’ll learn on this podcast episode

Corporate boards are feeling more pressure than ever from a variety of stakeholders—government prosecutors and regulators, institutional investors, corporate activists, consumers, and others seeking responsible change in an ever-changing global economy. As the concept of both corporate and individual accountability continues to expand, how can boards adapt their approach to governance and oversight to meet these increasingly complex expectations? In this episode of LRN’s Principled Podcast, host Susan Divers is joined by Michael Volkov, the CEO of the Volkov Law Group and author of the recent white paper “Directors Dancing on the Head of a Pin: Corporate Boards Face Escalating Risks and Enforcement Challenges.” Listen in as they discuss the global challenges corporate boards are facing in 2023, and the steps they can take to meet regulatory pressures. 

Guest: Michael Volkov

Michael Volkov

Michael Volkov specializes in ethics and compliance, white collar defense, government investigations, and internal investigations. Michael devotes a significant portion of his practice to anti-corruption, sanctions, trade, antitrust, and AML compliance and defense. He regularly assists clients on FCPA, UK Bribery Act, AML, OFAC, Export-Import, Securities Fraud, and other issues.

Michael has extensive trial experience and has developed a problem-solving approach to serve client needs. He has extensive contacts in the federal government and on Capitol Hill. Given his broad government experience, he represents clients in federal and state court, before the Justice Department and other federal agencies, and on Capitol Hill. 

Prior to launching his own law firm, Mr. Volkov was a partner at LeClairRyan (2012-2013); Mayer Brown (2010-2012), Dickinson Wright (2008-2010); Deputy Assistant Attorney General in the Department of Justice (2008); Chief Counsel, Subcommittee on Crime, Terrorism and Homeland Security, House Judiciary Committee (2005-2008); and Counsel, Senate Judiciary Committee (2003-2005); Assistant US Attorney, United States Attorney’s Office for the District of Columbia (1989-2005); and a Trial Attorney, Antitrust Division, United States Department of Justice (1985-1989).

Mr. Volkov resides in Washington, D.C., San Diego, California, and Marsala, Italy, with his wife and six children. He and his wife enjoy traveling, the arts, and philanthropic activities. Mr. Volkov is an avid tennis player. 

Host: Susan Divers

Headshot_Susan_Divers_S7E18_Principled_Podcast

Susan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.

Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.

Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.

Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.

She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. Mrs. Divers’ most recent publication is “Balancing Best Practices and Reality in Compliance,” published by Compliance Week in February 2015. In her spare time, she mentors veteran and university students and enjoys outdoor activities.