Tag: CCO

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Compliance Tip of the Day

Compliance Tip of the Day – A Roadmap for Compliance

Welcome to “Compliance Tip of the Day,” the podcast where we bring you daily insights and practical advice on navigating the ever-evolving landscape of compliance and regulatory requirements. Whether you’re a seasoned compliance professional or just starting your journey, we aim to provide bite-sized, actionable tips to help you stay on top of your compliance game. Join us as we explore the latest industry trends, share best practices, and demystify complex compliance issues to keep your organization on the right side of the law. Tune in daily for your dose of compliance wisdom, and let’s make compliance a little less daunting, one tip at a time.

Today, we discuss creating a roadmap for improving your compliance program.

For more information on the Ethico Toolkit for Middle Managers, available at no charge, click here.

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Creativity and Compliance

Creativity and Compliance – Upping Your Compliance Game

Where does creativity fit into compliance? In more places than you think. Problem-solving, accountability, communication, and connection—they all take creativity. Join Tom Fox and Ronnie Feldman on Creativity and Compliance, part of the award-winning Compliance Podcast Network.

Ronnie’s company, Learnings and Entertainment, utilizes the entertainment devices people use to consume information in their everyday, non-work lives and apply it to important topics around compliance and ethics. It is not only about being funny. It is about changing the tone of your compliance communications and messaging to make your compliance program, policies, and resources more accessible. In this episode of Creativity and Compliance, Tom Fox and Ronnie Feldman take up the challenge handed down by Hui Chen in light of the administration’s suspension of FCPA enforcement to up their compliance game.

Ronnie begins by advocating for a transformation in compliance training, suggesting a shift from traditional e-learning methods to engaging communication campaigns emphasizing a Speak Up Culture and seamlessly integrating compliance into daily business operations. He believes that by using short, entertaining formats and training leaders to present content playfully, compliance can become more interesting and effective, positioning compliance professionals as valuable assets through proactive engagement and collaboration. Tom underscores the importance of compliance professionals being approachable and communicative, serving as problem solvers who collaborate with business units to achieve unexpected, beneficial outcomes. Both experts agree that by humanizing the compliance function and focusing on values and behaviors, compliance professionals can enhance their programs and contribute significantly to organizational success.

Key highlights:

  • Engaging Communication Campaigns for Compliance Training
  • Strategic Communication for Compliance Professionals
  • Cultivating Proactive Compliance Culture through Training Programs
  • Strategic Engagement for Compliance Professionals

Resources:

Ronnie

  • Learnings & Entertainments (Website)
  • Compliance Confessions – inspired by “Mean Tweets” these 90-second commercials address misconceptions and excuses to promote speak up culture and the E&C team as positive and helpful.
  • E&C Training Jams – a soulful singer banters with ethics & compliance explaining policies, sharing examples and debunking excuses. 
  • Tales from the Hotline – Real speak up-themed stories about workplace behavior gone wrong.
  • Workplace Tonight Show! – E&C meets SNL Weekend Update explaining corporate risk topics and why employees should care.
  • 60-Second Communication & Awareness Shorts – A variety of short, customizable, music and multimedia, quick-hitter “commercials” promoting integrity, compliance, speaking up and the E&C team as helpful advisors and coaches.
  • Custom Live & Digital Programing – Custom creative programming that balances the seriousness of the subject matter with a more engaging delivery. After all, you can’t bore people into learning.

Tom

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For more information on the Ethico ROI Calculator and a free White Paper on the ROI of Compliance, click here.

Creativity and Compliance was recently honored as one of the Top 35 Podcasts on Creativity by Feedspot.

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Blog

Upping Your Compliance Game, Part 4 – Compliance and Building Corporate Resiliency

The Trump Administration has suspended FCPA enforcement for the foreseeable future. What does that mean for compliance professionals? Hui Chen has suggested that this is an opportunity for compliance, but to do so, “It’s time to up your game . . . Instead of selling insurance for FCPA enforcement, become leaders that help your organizations perform.” Based on this challenge by perhaps the most imminent compliance commentator, I am devoting this week’s blog posts to ways compliance professionals can indeed up their collective game. Today, we explore how effective compliance can help lead to greater business resiliency.

Resilience must be a core feature of every corporate compliance program. The reason is simple: compliance programs will inevitably face crises in today’s volatile and uncertain world. It could be from the Trump Administration’s suspension of Foreign Corrupt Practices Act (FCPA) enforcement, a natural disaster disrupting operations, the discovery of human rights abuses within the supply chain, activist shareholders pushing for corporate change, or new competitors leveraging technology to upend an industry. Recent history has shown us that global pandemics and social justice movements can also emerge to reshape the business landscape overnight.

In their article “6 Types of Resilience Companies Need Today,” Paul Polman and Andrew Winston explore how multinational corporations like Unilever have built resilience through both traditional and innovative strategies. Their insights offer valuable lessons for Chief Compliance Officers (CCOs) and compliance professionals seeking to fortify their organizations against future challenges.

Traditional Foundations of Corporate Resiliency

Polman and Winston highlight three traditional building blocks of corporate resiliency: financial flexibility, portfolio diversity, and organizational agility. These elements are critical in preparing companies for sudden shocks and long-term crises.

For compliance professionals, this means ensuring that the business remains functional during disruptions by embedding compliance within these foundational areas:

  • Financial Flexibility: Compliance contributes to financial stability by preventing costly legal issues, regulatory fines, and reputational damage. Strong compliance programs also help organizations maintain favorable relationships with investors, regulators, and business partners.
  • Portfolio Diversity: Just as businesses diversify revenue streams, compliance must diversify its approach to third-party risk management. This includes thoroughly vetting sales agents, distributors, and supply chain vendors to mitigate exposure to compliance failures.
  • Organizational Agility: Compliance agility allows teams to respond rapidly to emerging risks. By fostering real-time feedback from regional offices, compliance professionals can identify potential problems before they escalate into crises.

A resilient compliance function helps businesses survive crises but positions them to recover more effectively.

The Net-Positive Approach to Resilience

The authors emphasize that true corporate resilience goes beyond surviving crises. It involves creating a long-term, crisis-resistant organization that benefits all stakeholders. They advocate for a “net-positive” company model that seeks to improve the well-being of everyone it touches through its operations, value chain, products, services, and influence. This concept aligns closely with the goals of corporate compliance programs.

Purpose-Driven Compliance

Companies that understand their purpose and integrate it into their operations are more resilient in times of crisis. Purpose-driven organizations don’t see compliance as a regulatory obligation but as a strategic advantage. Compliance professionals reinforce this purpose by embedding ethical business practices into corporate strategy.

The Business Roundtable’s Statement on the Purpose of a Corporation emphasizes stakeholder engagement beyond shareholders. Compliance can advance this vision by aligning business operations with ethical principles, incorporating feedback from employees, customers, and suppliers, and reinforcing a corporate culture of integrity.

Aligning compliance controls with the COSO 2013 Framework for Internal Controls helps build a strong ethical foundation, ensuring compliance is woven into the company’s operational backbone rather than treated as an afterthought.

Trust: The Cornerstone of Compliance

Trust is an absolute necessity for any compliance program. Internally, trust is built through institutional fairness, due process, and a commitment to ethical leadership. However, compliance must also extend trust-building beyond the organization, fostering transparent relationships with external stakeholders.

Modern compliance programs must embrace a level of transparency that many organizations have historically resisted. This includes proactively disclosing compliance efforts, engaging in open dialogue with regulators, and embracing external scrutiny. Polman and Winston note, “Transparency is a great tool to ensure consistency and engender trust. Rather than rebelling against tough questions and pressure, business leaders should embrace and use them to build a stronger organization.”

By fostering a culture of transparency and accountability, compliance teams can help their organizations navigate crises with credibility and resilience.

Engaging All Stakeholders in Compliance

Compliance is traditionally seen as a back-office function, primarily engaging with internal departments and regulators. However, leading companies are increasingly expanding compliance’s role to include broader stakeholder engagement.

Polman and Winston argue that “net-positive companies build better connections with stakeholders besides employees.” Compliance functions can drive this by engaging customers, investors, supply chain partners, and local communities. This shift aligns with compliance’s growing role in third-party risk management and due diligence processes.

For example, companies that conduct rigorous due diligence on supply chain partners mitigate risk and foster stronger, trust-based relationships with ethical suppliers. Compliance’s role in these engagements ensures that ethical business practices extend beyond corporate walls, creating a network of partners who support the company’s long-term resilience.

The Compliance Function as a Driver of Resilience

When major crises strike, whether compliance-related or otherwise, organizations with resilient compliance programs can respond swiftly and effectively. Polman and Winston conclude, “No company can prepare for every outcome, but these six forms of resilience, put together, can provide a serious buffer. They also allow organizations to work in larger coalitions on the biggest issues, such as climate change and income inequality.”

Compliance functions are uniquely positioned to help businesses anticipate and prevent crises rather than merely reacting. By integrating compliance into the core fabric of corporate resilience strategies, organizations can:

  1. Prevent crises through proactive compliance risk management
  2. Build a strong ethical culture that fosters long-term stability
  3. Enhance stakeholder trust and engagement
  4. Ensure business continuity in the face of regulatory changes
  5. Support innovation by creating ethical frameworks for emerging technologies

These strategies are not just compliance best practices but essential components of building a company that thrives in times of change and uncertainty.

The best compliance programs do more than mitigate risk; they build corporate resilience. By aligning compliance with financial stability, organizational agility, and a broader net-positive vision, companies can prepare for the challenges of an unpredictable world.

Compliance professionals should seize the opportunity to lead this transformation, ensuring that their organizations endure crises and emerge stronger from them. In doing so, compliance becomes a function of risk avoidance and a strategic driver of long-term business success.

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Blog

Upping Your Compliance Game, Part 3 – Engaging Leadership

We continue exploring what the Trump Administration’s suspension of FCPA enforcement means for the compliance professional. Hui Chen has suggested that this is an opportunity for compliance, but to do so, “It’s time to up your game . . . Instead of selling insurance for FCPA enforcement, become leaders that help your organizations perform.” Based upon this prompting from her, I am writing this week on issues that compliance professionals can use to ‘up their [compliance] game so that when the questions come from your senior executives or Board of Directors come down about your compliance program, you will be able to point to clear business advantages to doing business ethically and in compliance.

Today, we consider how a chief compliance officer (CCO) or compliance professional can personally up their leadership game and move their compliance program to a more collaborative and integrated business function. The shift is driven by changes in corporate power dynamics, new values that prioritize transparency and collaboration, and an increasing emphasis on engagement with business units. In their Harvard Business Review article, Understanding “New Power,” Jeremy Heimans and Henry Timms explore how leadership models change. I have adapted their insights for Chief Compliance Officers (CCOs) and compliance practitioners who seek to enhance their function’s role within an organization.

The Shift from Old Power to New Power

Heimans and Timms describe the transition from “old power” to “new power” as a shift in the models used to exercise power and the values organizations embrace. Traditional compliance programs often operated under old power models, centralized, top-down structures that relied on authority and rigid governance. In contrast, new power models emphasize distributed, collaborative, and participatory leadership.

  1. Sharing and Shaping. In this new era under Trump, companies increasingly engage stakeholders, including employees and supply chain partners, in shaping compliance strategies. This shift recognizes that compliance is not just about adherence to regulations but about embedding ethical considerations into everyday decision-making. Companies that actively solicit input from their workforce and external partners create stronger, more effective compliance cultures.
  2. Organizations are using creative financial structures to embed compliance into business operations rather than treating it as a standalone cost center. Instead of viewing compliance as an overhead expense, forward-thinking businesses integrate compliance into investment decisions, allocate resources for proactive risk management, and leverage compliance to drive operational efficiencies and innovation.
  3. Employees and third-party stakeholders actively contribute to compliance initiatives rather than passively following directives. This participatory approach ensures that compliance is not merely a function of the legal or risk department but is embraced across the organization. Companies encourage employees to report issues, contribute to compliance improvements, and take ownership of ethical behavior.
  4. Co-Ownership. Compliance is decentralized, empowering employees at all levels to take ownership of ethical behavior. When employees and third parties feel personally responsible for compliance, adherence to ethical standards becomes more organic. Businesses that create opportunities for co-ownership in compliance initiatives through peer-led training, employee-driven reporting mechanisms, and cross-functional ethics committees build a more resilient ethical culture.

This shift makes compliance less about enforcing rules and more about embedding ethical business practices into the corporate culture. Organizations that embrace new power structures are better positioned to handle complex regulatory environments, foster innovation, and build trust among employees, customers, and stakeholders.

New Compliance Values: A Guide for Leadership

Beyond structural changes, Heimans and Timms identify new values that organizations must embrace to remain effective. These values directly apply to compliance professionals, who must ensure compliance is embedded within the organization’s broader culture and governance structures.

  • Decision-making is becoming more informal and network-driven, requiring compliance professionals to work across functions. Instead of a strict top-down enforcement model, modern compliance programs emphasize collaboration across departments, ensuring compliance is seamlessly integrated into everyday business activities.
  • Compliance programs must reward those who share best practices and improve existing compliance structures. Organizations that foster a collaborative compliance culture encourage employees to speak up about risks, participate in ethics initiatives, and help improve compliance processes.
  • Do It Ourselves (DIO). Employees expect to participate in ethical decision-making rather than be dictated to by top leadership. Empowering employees to take initiative in compliance—whether through peer-led training, ethics committees, or compliance ambassadors—creates a more engaged workforce and a stronger culture of accountability.
  • Organizations must foster open communication about compliance issues, internally and externally. A transparent compliance program builds trust with employees, investors, and customers. Companies that proactively disclose compliance efforts, encourage whistleblowing, and provide clear guidelines for ethical decision-making strengthen their credibility and resilience.
  • Younger employees are less likely to maintain long-term relationships with institutions, making an agile and adaptive compliance function essential. Compliance teams must develop dynamic and engaging strategies to connect with employees, including leveraging technology, social media, and innovative training programs to maintain engagement and adherence to ethical standards.

To succeed in this environment, compliance leaders must embrace these principles and adapt their approach accordingly. Compliance functions prioritized engagement, empowerment, and innovation will be better equipped to navigate the complexities of modern business environments.

Three Steps for Engaging Compliance Leadership

To fully integrate compliance into business strategy, CCOs and compliance practitioners should consider three key actions:

1. Assess Your Role in a Changing Power Environment

A compliance risk assessment has traditionally focused on external threats, but today’s CCOs must also assess their function internally. Where does your compliance program stand on the power spectrum, and where do you want it to be in five years?

  • Conduct an internal assessment to evaluate how compliance is perceived across departments.
  • Benchmark against industry leaders and best practices to identify areas for growth.
  • Engage in strategic conversations with executives and employees to understand their compliance expectations and challenges.
  • Develop a vision for the future of compliance in the organization, ensuring alignment with business objectives.

Organizations can proactively identify gaps and opportunities to enhance their compliance function by assessing compliance through a broader lens.

2. Incorporate Business Unit Interests (The UX)

To be effective, compliance should not operate in a silo or, as Carsten Tams continually reminds us, “It’s all about the UX.” Business units should have a voice in shaping compliance policies. This means:

  • Conduct honest conversations with employees and leadership about compliance’s impact on business operations.
  • Soliciting feedback from business units before imposing compliance requirements.
  • Recognizing compliance as a business enabler, not just a risk mitigation function.
  • Encouraging cross-departmental collaboration on compliance initiatives.

As Heimans and Timms note, introspection and engagement must precede any investment in compliance initiatives. Organizations that fail to engage business units in compliance discussions risk resistance, non-compliance, and inefficiencies.

3. Mobilize Compliance Capacity Across the Organization

Compliance leaders must proactively engage third parties and business ventures, such as joint ventures and supply chain partners, to extend compliance influence beyond internal teams.

  • Establish compliance training programs tailored to third-party vendors and supply chain partners.
  • Implement robust third-party due diligence processes to ensure compliance throughout the supply chain.
  • Develop reporting mechanisms that allow external partners to flag compliance concerns.
  • Build alliances with industry groups and regulators to stay ahead of evolving compliance trends.

For example, compliance expert Mary Jones, former Director of Compliance at Global Industries Ltd., emphasized the importance of training third parties. She traveled to supplier locations to conduct in-person compliance training, fostering stronger relationships and enhancing compliance effectiveness. This proactive approach strengthened Global Industries’ compliance function and positioned their suppliers as allies in the compliance journey.

A successful compliance function does more than enforce rules; it builds a network of ethical partners who actively support compliance objectives.

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Adventures in Compliance

Adventures in Compliance – Institutional Justice and Institutional Fairness Lessons from The Adventure of the Veiled Lodger

In this new season of Adventures in Compliance, host Tom Fox takes a deep dive into Arthur Conan Doyle’s Sherlock Holmes collection, The Case-Book of Sherlock Holmes. It is the final set of twelve Sherlock Holmes short stories, first published in the Strand Magazine between October 1921 and April 1927. In this episode, we consider the story The Adventure of the Veiled Lodger.

Tom emphasizes the importance of fairness and transparency in compliance investigations, accountability without retaliation, encouraging whistleblowers, and addressing systemic failures. The episode also highlights how ethics and compliance must be ingrained in corporate culture, reflecting principles from the Department of Justice’s 2020 and 2024 updates to the Evaluation of Corporate Compliance Programs. Through Holmes’ empathetic approach, compliance professionals can learn the importance of contextual investigations and the pursuit of institutional justice. Tom invites Sherlock Holmes enthusiasts to engage in discussions about the stories and underscores the role of compliance in fostering a fair and ethical workplace.

Highlights include:

  • The Story of the Veiled Lodger
  • Lessons on Institutional Justice and Fairness
  • Lessons for CCOs

Resources:

The New Annotated Sherlock Holmes

Sherlock Holmes FAQ by Dave Thompson

For more information on the Ethico Toolkit for Middle Managers, available at no charge, click here.

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Blog

Right is Right/Wrong is Wrong: Trump, The FCPA and Effective Compliance

In a surprise to no one, President Trump said he was suspending Foreign Corrupt Practices Act (FCPA) enforcement. Why is it no surprise? Because the FCPA commits illegal bribery and corruption against foreign officials and employees of state-owned enterprises outside the US. Trump wants to make such business tactics legal for US companies, as he thinks US companies cannot compete with other international actors without engaging in such illegal conduct. But the reality is that Mark Twain was correct; ‘right is right and wrong is wrong,’ and Trump’s pronouncement of non-enforcement did not make bribery and corruption of foreign officials and employees of state-owned enterprises outside the US legal. This announcement also puts more US companies at risk for shakedowns by corrupt foreign officials.

For the compliance professional, this suspension of FCPA enforcement will make having an effective corporate compliance program even more important for the upcoming 3+ years of Trump’s final term. I want to break down the reasons for continued effective compliance into legal and business.

Criminal Reasons

A. 5-Year Statute

The FCPA is still the law of the US. Any company or person who now engages in bribery and corruption of foreign officials and employees of state-owned enterprises outside the US will violate the FCPA. There is a five-year statute of limitation on FCPA enforcement, so even if your organization decided to start bribing today, there would be a five-year window of potential liability. Moreover, it is five years from the discovery of the illegal conduct, so unless your organization affirmatively states via its books and records that it has engaged in illegal activities and violated the FCPA, there will be an even longer tail for investigation and prosecution.

B. SEC and Books and Records

Remember, the FCPA has two basic provisions. One, thou shalt not bribe foreign officials and employees of state-owned enterprises outside the US. Second, thou shalt have accurate books and records. The Securities and Exchange Commission (SEC) enforces this second component of the FCPA. It has two parts: (a) financial books and records that accurately reflect the financial condition of the organization and (b) effective internal controls that prevent bribery and corruption. Is the SEC now going to turn its back by allowing companies that engage in illegal actions to puff up their profits to defraud the American public?

C. Individual Prosecutions Outside the US

The stakes are even higher for the individual corporate employee doing business outside the US. NO country in the world says that bribing our government officials is legal. That makes any such bribe illegal. This is not about an extra-territorial law such as the FCPA, where China or Nigeria would come to the US and arrest a US citizen for actions in China or Nigeria. Instead, it is about China or Nigeria enforcing their domestic laws. Remember the GlaxoSmithKline PLC (GSK) bribery conviction in China in 2014. A Chinese court fined the company nearly $500 million dollars. Equally significant was the criminal conviction of the Country Manager and several of his direct reports. With the Trump Administration aiming more tariffs and other trade sanctions at China, does anyone not think the Chinese government may well open investigations, warranted or not, at US corporations doing business in China and US individuals working in China? (For a full discussion of the entire sordid affair of GSK in China, read my book on it, available on Amazon.com)

What about detaining US businesspersons on more trumped-up charges? Just look at what purported US ally Nigeria did to Binance compliance officer Tigran Gambaryan in 2024. According to the New York Times (NYT), the “Nigerian government charged Mr. Gambaryan and Binance itself with tax evasion and money laundering — effectively accusing the company and a midlevel employee of the same crimes.” He was held in custody for eight months in a Nigerian prison in Abuja. Both the GSK matter and Gambaryan’s case point to the real risks that US businesspersons may now well face if they engage in bribery and corruption outside the US. Wherever you want to be, a prison in China or Nigeria is not one of those places.

Business Reasons

A. The Bribery Tax

Paying bribes is a cost. Once you pay a bribe, corrupt officials have you in their collective back pockets. Multiple FCPA enforcement actions over the years have demonstrated that corruption officials are never shy about demanding more illegal payments during the life of a business relationship. Does an organization think a one-time bribe payment will secure your contract? Once corrupt government officials eat at the trough of a corrupt company, they always come back for more. Churchill said, ‘One, we have established your morals; now it’s just a question of the amount.’

Bribery can be a one-time payment or much more ongoing. Bribes are a percentage of the overall contract value and can go up or down. Who is going to keep those records, and how does an organization engage in such negotiations? It sounds like trying to negotiate with organized crime. The bottom line is that bribes are a tax that any organization subjects itself to when it engages in corruption.

B. Negative Impact on Revenue

Not only does paying bribes put an individual and organizations at criminal risk, but it can also be more costly and a less effective business strategy in the long run. A CFO.com article reported that George Serafeim and Paul Healy of Harvard Business School released a paper in the American Accounting Association journal The Accounting Review that the business impact of paying bribes “overall effect on a company’s finances is nil—a poor result, given that the practice could trigger damaging media. Yet bribes are costly. The low returns on equity on incremental sales in high-corruption markets for firms [that commit bribery] imply that the costs are not fully recovered through higher prices on corrupt contracts or through scale economies from increased sales.”

Statistically, the authors reviewed some “480 large multinational companies from 32 countries; those with strong anticorruption programs had average sales growth over three years of 2.6% in high-bribery countries or regions, far below the 14.1% achieved by anticorruption laggards. Yet, that didn’t translate to a greater gain in return on equity for the latter group compared with the former. “On average, the sales growth and ROE effects are offsetting.”

C. Department of Bribery and Corruption

Now, think about the business impact of how bribes might be paid. Will your organization go full Siemens or Odebrecht and create an entire department dedicated to bribery and corruption? Will your organization change its Code of Conduct to say that now that the Trump Administration has suspended FCPA enforcement, your company will engage in illegal acts? Are you going to try to hide your newfound business strategy? If so, what is the cost of announcing that your organization believes in unlawful acts to gain business? What business executive will lead this organization and put their head on the chopping block for directing illegal activity?

Your organization would be skewered in the court of public opinion. Just as consumers have no interest in purchasing clothing or other products created by slaves or forced labor, they would have zero interest in companies that pay bribes to garner business. Such actions could also lead to more civil actions for anti-competitive behavior brought by private parties.

But here, the greater risk is internal for companies. After 20 years of training on not paying bribes, how to spot a bribe, and who not to do business with, the Trump Administration expects US companies to change course. What will this do to a culture of doing business ethically and in compliance? If corporate execs set up a Department of Bribery and Corruption or try to hide it, what message does that send to employees? It sends the message that engaging in bribery, corruption, and fraud is acceptable in our organization.

This fraud component may be the most important business reason for robust compliance. Every ACFE Report to the Nations makes clear that corruption is a subset of fraud. Any company that supports bribery and corruption will be more susceptible to employees engaging in fraud. After all, if a company is willing to violate the law to make money, why shouldn’t employees do so as well?

III. Compliance is the Key

I have set out all of these scenarios to explain why compliance will become even more important during this second Trump administration. If doing ethics is doing the right thing when no one is looking, then compliance should be seen as the business process that follows up to ensure it is all happening. Going forward, the need for effective compliance will only increase, and the pressure on compliance professionals will intensify. An effective compliance program will make your business run more efficiently and more profitably. It will protect your organization from various woes brought on by the current administration.

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Blog

The Rising Tide of CCO and CISO Liability

The issue of personal liability for Chief Compliance Officers (CCOs) and Chief Information Security Officers (CISOs) is not new, but as we move into 2025, it is becoming an increasingly pressing concern. The regulatory environment is evolving, and enforcement trends indicate a growing willingness among prosecutors to target individual executives. The cases of Joe Sullivan, Carlos Abarca, and Tim Brown highlight critical lessons for compliance professionals. These cases—and the broader regulatory framework—underscore the importance of proactive risk management, clear governance structures, and a strong compliance culture. Jonathan Armstrong and I explored these cases, their issues, and the lessons learned from them in a recent episode of the award-winning podcast Life with GDPR.

Personal Liability: A Trend That’s Here to Stay

The SEC has long embraced the idea of holding individuals accountable for corporate misconduct. The rationale is simple: corporations may treat fines as a cost of doing business, while individual prosecutions create a stronger deterrent effect. This approach is particularly evident in cybersecurity failures, data breaches, and financial misrepresentation. Indeed, former SEC Director of Enforcement Gurbir Grewal, in a speech to the New York City Association Compliance Institute in 2023, said that there were “three situations where the Commission typically brings enforcement actions against compliance personnel.” These three are:

  1. Where compliance personnel affirmatively participated in misconduct unrelated to the compliance function;
  2. Where they misled regulators, and
  3. They had a wholesale failure to carry out their compliance responsibilities.

The question facing compliance professionals is no longer whether they could be held personally liable but how to mitigate that risk. We then turned to three key individual cases to see what lessons might be drawn.

Case Studies in Individual Accountability

  • Joe Sullivan and the Uber Case

Joe Sullivan, a former federal prosecutor and Uber’s CISO, was convicted for his role in covering up a data breach. When hackers exploited Uber’s system, Sullivan arranged a $100,000 payment through Uber’s bug bounty program, framing it as a legitimate transaction rather than a ransom payment. The prosecutors argued that he misled regulators and obstructed justice. Though Sullivan avoided prison and received a sentence of three years probation, the judge clarified that future cases might not be met with such leniency. The lesson here? Transparency is non-negotiable. Attempting to manage a breach in secret, even with good intentions, can result in severe personal consequences.

  • Carlos Abarca and the TSB Bank Migration Failure

Carlos Abarca, former CIO of TSB Bank, oversaw an IT migration project that ultimately failed, leading to widespread customer service outages. During board meetings, Abarca assured directors that the project was on track. However, regulators scrutinized his statements when the migration went awry due to supplier failures. He was fined nearly $100,000, with investigators even citing his LinkedIn profile, where he described himself as an expert in change management. The key takeaway? CCOs and CISOs must ensure that their public and internal statements accurately reflect organizational realities. Overstating capabilities—or underreporting risks—can become evidence of liability.

  • Tim Brown and the SolarWinds SEC Action

Tim Brown, SolarWinds’ CISO, faced SEC charges for allegedly misleading investors about the company’s cybersecurity posture. The SEC contended that Brown downplayed known security risks, making generic statements such as “we could be attacked” while failing to disclose specific vulnerabilities that were internally documented. Though these charges were eventually dismissed, it highlighted the increasing role of securities regulators in policing cybersecurity disclosures. For compliance professionals, this underscores the importance of precise, fact-based reporting. Vague assurances will not suffice when regulators uncover internal evidence of known risks.

Regulatory and Legislative Trends: A Tougher Landscape Ahead

The move toward personal liability is not just a U.S. phenomenon. The EU’s Digital Operational Resilience Act (DORA), the Cyber Resilience Act, and similar regulations introduce new accountability mechanisms for compliance and security professionals. These laws emphasize:

  1. Personal responsibility for cybersecurity and compliance failures
  2. Heightened reporting obligations for executives
  3. Potential fines and bans from holding future positions

Furthermore, changes in corporate listing rules, especially regarding cybersecurity disclosures, suggest that more CCOs and CISOs will be in the regulatory crosshairs. With shareholder lawsuits also on the rise, particularly in the U.S., individuals may face government enforcement and private litigation.

Mitigating Personal Risk: What Compliance Officers Can Do

Given these trends, compliance professionals must take proactive steps to protect themselves. We reviewed the following steps a CCO/CISO could take.

  • Due Diligence Before Accepting a Role

If you are considering a new compliance or security leadership position, conduct thorough due diligence on the organization:

  1. Investigate past compliance failures or regulatory issues.
  2. Assess the board’s composition and governance practices.
  3. Evaluate the company’s historical commitment to compliance and cybersecurity.

A company with a poor compliance track record or a weak board structure may pose significant personal risks.

  • Clarify Your Role and Responsibilities

Clearly define your job responsibilities, ensuring that you supervise compliance rather than solely being responsible for it. A well-drafted job description should:

  1. Specify oversight responsibilities rather than direct operational duties.
  2. Ensure a direct reporting line to senior leadership or the board.
  3. Include indemnification clauses in cases of legal action.
  • Secure Adequate D&O Insurance

Directors and Officers (D&O) insurance is a critical safeguard. Compliance professionals should:

  1. Confirm that D&O insurance covers regulatory and enforcement actions.
  2. Negotiate for personal indemnification clauses in employment contracts.
  3. Ensure coverage is broad enough to include cybersecurity incidents and regulatory fines.
  • Strengthen Internal Reporting and Documentation

Proper documentation is one of the best defenses against liability.

  1. Ensure board minutes accurately reflect discussions about compliance and risk.
  2. Maintain records of risk assessments and mitigation efforts.
  3. Encourage formal reporting mechanisms rather than informal communications.
  • Be Cautious with Communications

Emails and internal memos can become evidence in investigations. Best practices include:

  1. Avoid speculative discussions about compliance risks.
  2. Stick to factual reporting and avoid overly optimistic statements.
  3. Encourage employees to use formal reporting channels rather than casual email exchanges.

Looking Ahead: What to Expect in 2025

As regulatory scrutiny increases, compliance and security professionals must remain vigilant. We can expect:

  1. More enforcement actions targeting individuals rather than just corporations.
  2. Greater regulatory focus on cybersecurity disclosures in public filings.
  3. Stronger whistleblower protections increase the likelihood of internal reports leading to investigations.
  4. Continued expansion of liability under new European and U.S. regulations.

The era of heightened personal liability for compliance and security executives stays here. The best defense is a strong offense: conducting due diligence before taking a role, clearly defining responsibilities, securing proper insurance, maintaining meticulous documentation, and ensuring precise internal and external reporting. In this new environment, compliance professionals must not only safeguard their companies but also themselves.

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Building Trust in AI with Blockchain: A Compliance Perspective

Artificial Intelligence (AI) has rapidly become a key driver of business decision-making across industries, from financial services to healthcare. Yet, despite its enormous potential, AI remains a “black box” that raises serious concerns about transparency, accountability, and fairness. According to Pew Research, 52% of Americans are more concerned than excited about AI, while only 10% express enthusiasm. This trust deficit presents a critical challenge for compliance professionals: how can organizations demonstrate responsible AI use and ensure compliance with evolving regulatory expectations?

I was therefore intrigued to read a recent article in the Harvard Business Review by Scott Zoldi and Jordan T. Levine entitled, Using Blockchain to Build Customer Trust in AI. Their response to this quandary was to look at FICO, a leader in financial analysis and ratings, which developed a private blockchain that automated documentation and standards in model development. FICO’s approach leaned directly into a series of strategies used by compliance professionals.

The Compliance Challenge of AI

AI’s ability to analyze vast amounts of data and generate predictions is its greatest strength and its most significant liability. Machine learning models can reinforce biases, lack interpretability, and operate without clear accountability. Compliance professionals must address these challenges head-on by ensuring that AI models are:

  • Interpretable: Customers and regulators need to understand how AI models make decisions.
  • Auditable: Organizations must maintain detailed records of AI development and deployment.
  • Enforceable: Compliance teams need mechanisms to ensure adherence to ethical AI standards.

Without these three pillars, AI risks becoming a compliance nightmare that could lead to regulatory penalties, reputational damage, and loss of customer trust.

Blockchain ensures that AI models are developed following internal guidelines and regulatory requirements. Every modification to the model, from data selection to algorithmic tuning, is permanently recorded, making it easier for compliance officers to track decisions and pinpoint the cause of any discrepancies. This immutable nature benefits industries with strict regulations, such as finance and healthcare, where audits and regulatory reviews are routine.

Additionally, blockchain helps prevent unauthorized alterations by requiring cryptographic verification before changes are accepted into the system. Any attempt to introduce bias, manipulate datasets, or adjust algorithms must be documented and approved transparently. This enhances accountability and strengthens organizational trust in AI.

Blockchain’s integration into AI governance fosters cross-functional collaboration between compliance, legal, and data science teams. Using a single, tamper-proof source of truth, organizations can streamline communication and ensure that AI-related decisions align with corporate policies and industry standards. This collaborative approach mitigates risks and reduces inefficiencies, allowing businesses to innovate responsibly while maintaining regulatory compliance.

For compliance professionals, blockchain provides an operational framework supporting continuous AI model monitoring and improvement. It facilitates real-time oversight, allowing organizations to identify potential compliance risks before they escalate into regulatory violations or reputational damage. As AI technology evolves, blockchain’s role in governance will likely expand, offering even greater opportunities for secure, transparent, and ethical AI development.

Blockchain: A Path to AI Accountability

Blockchain technology offers a potential solution by providing an immutable, transparent record of AI model development and decision-making. The authors reviewed FICO’s adoption of blockchain. They learned, “Making this system work was less a tech challenge than a people one. They learned it was important to start with standards, then develop the tech; that making the system user-friendly was non-negotiable; that it was essential to iterate on quick wins; that they had to build repositories to hold large AI assets in alternate storage; and that they needed capable IT teams to handle the maintenance demands of this system.”

By moving from traditional documentation methods (such as Word documents) to a private blockchain, FICO:

  • Reduced model support issues and recalls by over 90%.
  • Created a single source of truth for AI model development.
  • Ensured absolute adherence to AI governance standards.

Blockchain’s ability to create an auditable trail of every change, test, and decision made during AI model development provides a powerful compliance tool. Unlike conventional documentation, blockchain prevents unauthorized changes and ensures compliance teams can verify AI decisions long after they are made.

Beyond compliance, blockchain enhances the efficiency of AI governance by automating tracking mechanisms that reduce administrative burdens. Traditionally, managing AI development required extensive oversight, documentation, and verification processes, often prone to human error or oversight. By leveraging blockchain, organizations can automate this oversight, ensuring that model updates, training datasets, and algorithmic adjustments are securely recorded in a tamper-proof ledger. This improves compliance and accelerates AI innovation by reducing bottlenecks in model validation.

Additionally, blockchain’s transparency enables better cross-functional collaboration between compliance officers, data scientists, and IT security teams. Instead of relying on disparate documentation and periodic audits, stakeholders can access a real-time, immutable ledger of AI development activities. This fosters greater accountability and ensures that AI models align with ethical guidelines, regulatory requirements, and corporate governance policies from inception to deployment.

Blockchain can mitigate risks associated with AI bias and ethical concerns by providing a structured framework for tracking model modifications and testing processes. Any deviation from approved methodologies is recorded, allowing organizations to detect and address potential issues before they impact decision-making. This proactive approach strengthens AI reliability and fosters trust among regulators, customers, and stakeholders who demand greater transparency in automated decision-making processes.

By integrating blockchain into AI governance, organizations gain a robust compliance tool that ensures models are developed responsibly, deployed ethically, and maintained transparently. As regulatory scrutiny around AI continues to grow, adopting blockchain-based governance is not just an operational advantage; it can provide both a strategy and mechanism for maintaining trust and regulatory compliance in the evolving AI landscape.

Key Compliance Lessons from FICO’s Blockchain Approach

1. Standards Must Come First

Before implementing blockchain, organizations must establish clear AI development standards. This includes defining acceptable algorithms, ethical testing methodologies, and regulatory compliance requirements. Without these guardrails, blockchain is just another technology without purpose.

2. User Adoption Requires a Seamless Experience

One of the biggest hurdles in AI governance is ensuring that data scientists comply with established processes. At FICO, blockchain-based AI governance became non-negotiable—developers could not release models without following the blockchain-tracked workflow. Making compliance seamless rather than burdensome is key to adoption.

3. AI Governance Must Be Iterative

FICO’s blockchain approach evolved, starting with small proofs of concept before scaling across its AI development teams. Compliance professionals should take a similar approach, testing blockchain governance in high-risk areas before expanding its use across the organization.

4. Immutable Records Are Key for Regulatory Defense

Regulators are increasingly scrutinizing AI-driven decisions, especially in highly regulated industries such as finance and healthcare. An immutable AI development, testing, and deployment record provides a powerful defense against regulatory inquiries. It also enables organizations to demonstrate compliance rather than scrambling to justify decisions afterward proactively.

5. Blockchain Is a Tool, Not a Silver Bullet

While blockchain enhances AI governance, it is not a substitute for a strong compliance program. Organizations must still conduct rigorous ethical testing, monitor AI performance, and engage with regulators to ensure ongoing compliance. Blockchain should be viewed as an enabler of trust, not a cure-all.

Final Thoughts: The Future of Compliance in AI Governance

As AI becomes more embedded in business operations, compliance professionals must evolve their oversight strategies to keep pace. Blockchain offers a compelling approach to ensuring AI accountability, but it requires careful implementation, clear governance standards, and buy-in from business leaders.

FICO’s success demonstrates that trust follows when AI governance is built on transparency, auditability, and enforceability. Compliance professionals who embrace blockchain’s potential can help bridge the trust gap in AI, ensuring that these powerful technologies are used responsibly, ethically, and in full compliance with regulatory expectations.

For compliance teams, the question is no longer whether AI governance needs to evolve but how quickly organizations can implement solutions that keep AI accountable. Blockchain is one step in the right direction.

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The Compliance Sabbatical

The world of corporate compliance is demanding. It requires constant vigilance, deep ethical reasoning, and navigating ever-evolving regulatory landscapes. Compliance professionals are often the last defense against misconduct, ensuring companies adhere to laws and ethical standards. But with great responsibility comes great stress, and burnout is an all-too-common reality in our field. I was intrigued when I came across a recent article in the Havard Business Review by DJ DiDonna, entitled The Case for Sabbaticals — and How to Take a Successful One.

A sabbatical, defined by DiDonna as an intentionally extended leave from your job-related work, may seem out of reach for many workers. But if you can swing it, the potential payoff is enormous. Taking one could be transformational for your life and career. Research and interviews with more than 250 sabbatical-takers reveal the key attributes that define these breaks, the three distinct sabbatical types, and the hurdles one must overcome to persuade bosses, colleagues, and yourself that it is a good idea. DiDonna makes a compelling argument that stepping away from work for a meaningful period is not simply beneficial; it can be transformative. A sabbatical can be essential for maintaining long-term effectiveness and well-being for compliance professionals who operate under high-pressure conditions.

The Compliance Burnout

Compliance officers work in an environment of constant scrutiny. The stakes are high, and the margin for error is razor-thin. Between managing regulatory risks, conducting investigations, and ensuring ethical corporate behavior, the stress can take a cumulative toll. Research shows that burnout leads to reduced effectiveness, poor decision-making, and even ethical lapses, precisely what compliance professionals are hired to prevent. A sabbatical offers a structured way to step back before burnout reaches critical levels. It allows professionals to reset mentally and physically, returning to work with renewed energy and sharper focus.

Benefits of a Sabbatical

1. Reconnecting with Purpose

One of the most significant benefits of a sabbatical is reassessing professional and personal priorities. Many compliance professionals enter the field driven by a strong ethical compass and a desire to make a difference. However, the daily grind, dealing with corporate bureaucracy, managing regulatory challenges, and sometimes confronting internal resistance can wear down that initial sense of purpose.

A sabbatical provides space to reflect on career goals and reconnect with the motivations that drew one to compliance in the first place. DiDonna’s research highlights that many sabbatical-takers return with a clearer sense of direction, often making strategic career shifts or doubling down on their professional mission.

2. Enhancing Strategic Thinking

Regulatory compliance is a dynamic field. Laws change, enforcement priorities shift, and new risks emerge. Staying ahead requires strategic thinking and adaptability. Yet, when professionals are caught up in the day-to-day pressures of compliance, it can be not easy to see the bigger picture.

A sabbatical can foster deep thinking and learning that compliance professionals rarely have time for. Whether through travel, study, or personal projects, time away from routine responsibilities can lead to fresh insights that improve compliance strategy and risk management upon return.

3. Cultivating Resilience and Creativity

Innovation isn’t a word often associated with compliance, but the best compliance programs thrive on creative problem solving. How do you foster a speak-up culture? How do you implement effective training that resonates with employees? How do you navigate gray areas where the law is ambiguous?

Time away from work stimulates creativity, especially when spent in new environments or pursuing new experiences. Compliance officers who take sabbaticals often return with novel approaches to training, policy implementation, and risk assessment.

Practical Steps to Make a Sabbatical Work

Despite the benefits, many compliance professionals hesitate to take a sabbatical. They worry about job security, financial implications, and how their absence might impact their organization. However, with careful planning, a sabbatical is more feasible than most professionals realize.

  1. Plan Ahead: A sabbatical does not have to mean quitting your job. Many organizations offer formal sabbatical programs, even those that do not may accommodate unpaid leave for valued employees. The key is to plan early and present a business case for how your time away will ultimately benefit the organization.
  2. Set Clear Boundaries: A true sabbatical means fully disconnecting from work. That means no checking emails or staying involved in projects remotely. The point is to create distance, both physically and mentally.
  3. Structure Your Time: A sabbatical should be intentional, whether traveling, volunteering, studying, or simply spending time with family. The goal is not simply to take time off but to recharge through engaging in experiences that provide renewal and perspective.

A Strategic Investment in Longevity

Corporate compliance isn’t a sprint; it’s a marathon. To be effective over the long haul, professionals need to pace themselves. Taking a sabbatical is not a luxury; instead, it is an investment in the longevity of individuals and the organizations they serve. Companies benefit when their compliance teams are engaged, refreshed, and thinking strategically.

If compliance professionals want to avoid burnout, enhance their strategic thinking, and return to work with renewed purpose, they should seriously consider taking a sabbatical. The research is clear: stepping away can make all the difference, even temporarily.

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Using GenAI to Make Small Transformations

A recent article entitled Generate Value From GenAI With ‘Small t’ Transformations by Melissa Webster and George Westerman caught my attention. The authors posited that business leaders get real value from large language models by working their way up the risk slope and building the foundation for larger future transformations. However, they came up with an interesting strategy to test their question. They wrote, “As business strategists, we wanted to see what generative AI could add to our work. We explored this question through experiments on different aspects of the strategy creation process. In each experiment, we put a realistic strategy question to ChatGPT, followed by a lengthy back-and-forth to refine the initial responses. The intention was to understand how the tool can support ideation, experimentation, evaluation, and the building of stories—and where it falls.”

Basically, they used ChatGPT and generative AI (GenAI) to create and refine the strategy. I found this approach very interesting for the compliance professional. From this approach, they learned lessons in three uses applicable to the compliance professional.

  1. GenAI in Tasks That Are Common to Individuals in Many Roles
  2. Specialized GenAI for Compliance Professionals
  3. Enhancing the UX

Common Tasks. Compliance professionals can use large language models (LLMs) in ways that are useful to many compliance roles, such as writing, synthesizing information, generating imagery, and documenting meetings. GenAI’s near-ubiquitous nature can have a real impact on your compliance function. You can buy or create integrated tool sets that link generative AI to other functions that compliance professionals typically perform. Benefits vary by use and user, with individual initiative-taking and prompting skills influencing the value they derive.

Consider adding compliance-specific intelligence by training models on terminology and information that are proprietary to the company. For example, the authors point to the “Global consulting firm McKinsey built Lilli, [which built] a platform that links generative AI to its intellectual property from over 40 internal sources. The effort involved significant technical hurdles; for example, the tool needed to be changed to read PowerPoint slides, one of the company’s main ways of communicating project information, but the platform is providing value. For instance, if a consultant has a question about green energy business models in less-developed economies, Lilli can quickly find and synthesize information from projects that have already studied the problem somewhere in the world. McKinsey has reported that the platform’s capabilities and robust employee education led to about 75% of employees actively using Lilli in less than a year, time savings of up to 30%, and substantially improved quality.”

McKinsey is not alone in developing these specialized models for the general workforce. The same approach would work for a compliance function.

Specialized GenAI for Compliance. In this category, the authors say that “companies working their way up the risk slope are developing generative AI capabilities to improve productivity and quality in specific job roles or business processes. There is less tolerance for unacceptable output here.” These GenAI resolutions “typically maintain a human in the loop, where employees interact with the tools and review the outputs rather than allowing the GenAI tools to make decisions or produce outputs automatically.” Moreover, such outputs would seem directly suited for the compliance function.

In the space adjacent to compliance, the world of corporate finance, the authors found that “finance teams are relatively late adopters of new technologies, with CFOs citing technology gaps, data concerns, and competing priorities as reasons for that lag.” What does that sound like? Many legally trained corporate compliance officers.

The authors cited, “One international energy company we studied created a tool using a mix of GenAI, traditional AI, and other algorithms to suggest mitigations or help rewrite an audit report. Other companies use generative AI to assist in drafting reports for audits or regulatory compliance. At Amazon, the finance function uses rules-based AI, machine learning, and LLMs to address tasks in fraud detection, contract review, financial forecasting, personal productivity, interpretation of rules and regulations, and tax-related work.” Such a tool could move compliance professionals from repetitive tasks to focus more on work involving critical thinking.

Enhancing the UX. The next step for GenAI in compliance is with its customers, i.e., corporate employees. Just as GenAI is transforming traditional customer service and retail engagement, it can do so for interactions by compliance and employees. Unlike traditional phone menus or robotic process automation (RPA) chatbots, GenAI enables dynamic, multilingual responses, enhancing customer experience while optimizing operational efficiency. Take the example of John Hancock, which has implemented AI-driven chatbots to manage routine inquiries, allowing human agents to focus on more complex customer needs. This shift improves response times, reduces costs, and increases employee efficiency. Now, apply that strategy to your employees.

Beyond text-based interactions, GenAI is expanding into voice-based customer engagement. Companies like Starbucks, Domino’s, CVS, and major banks are integrating AI-driven voice assistants with future applications that will likely include video-based interactions. Compliance can also use all of these strategies.

By pursuing small-t transformation, often with a human in the loop, as they build capabilities, your compliance team can enable the development of applications with higher value and risk. The authors list several actions a Chief Compliance Officer (CC) can take to generate transformation with generative AI.

  1. Identify key pioneers in your organization and develop your messaging. With generative AI, innovation often comes from “cyborgs”—early adopters who integrate the technology into their work and are motivated to use it to solve a problem for themselves or their customers. Use them to communicate your innovation vision.
  2. Assess your company’s current position on the risk slope. What are you already doing, and what would be the next level of complexity and reward? Look at opportunities in individual productivity, role-specific enhancements, and innovations in product or customer engagement.
  3. Consider scalability. The authors noted, “According to the head of AI at a large bank we spoke with, “the more stuff you do, the more stuff you find to do.”
  4. Secure management buy-in. Small-t innovations can help to make the value story real and make the case for investments that can reduce the perceived risk of larger opportunities.
  5. Investigate foundational investments. Some of the boldest use cases will require extensive investment in data cleansing, model training, and integration before they can be ready for a real-world test.
  6. Maintain a long-term perspective. “The transformative cases take longer to build the business case, test the models, change behaviors, etc.,” said Chris Bedi, chief customer officer at software company ServiceNow. “The challenge is not only technical but also leaders taking time to reimagine their future with big ideas.”

The bottom line is that while productivity gains are the expected and common benefits of applying GenAI to specialized roles and tasks in compliance, the technology’s true impact extends further. GenAI is fundamentally transforming what compliance professionals can achieve. GenAI is enabling innovations and reshaping traditional compliance processes by enhancing efficiency and expanding the realm of possibilities within various functions.