Tag: compliance

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31 Days to More Effective Compliance Programs

One Month to More Effective Written Standards: Day 7 – Policies and Procedures

There are numerous reasons to put some serious work into your compliance policies and procedures. They are certainly a first line of defense when the government comes knocking. The 2020 Update made clear that “Any well-designed compliance program entails policies and procedures that give both content and effect to ethical norms and that address and aim to reduce risks identified by the company as part of its risk assessment process.”

This statement made clear that the regulators will take a strong view against a company that does not have well-thought-out and articulated policies and procedures against bribery and corruption, which are systematically reviewed and updated. Moreover, having policies written out and signed by employees provides what some consider the most vital communication layer and acts as an internal control. Together with a signed acknowledgment, these documents can serve as evidentiary support if a future issue arises. In other words, the “Document, Document, and Document” mantra applies just as strongly to policies and procedures in anti-corruption compliance.

The specific written policies and procedures required for a best practices compliance program are well-known and long-established. According to the 2020 FCPA Resources Guide 2nd edition, some of the risks companies should keep in mind include the nature and extent of transactions with foreign governments (including payments to foreign officials), use of third parties; gifts, travel, and entertainment expenses; charitable and political donations; and facilitating and expediting payments. Policies help form the basis of expectations for standards of conduct in your company. Procedures are the documents that implement these standards of conduct.

Three key takeaways:

1. Written compliance policies and procedures, together with the Code of Conduct, form the backbone of your compliance program.

2. The DOJ and SEC expected well-thought-out and articulated compliance policies and procedures to be adequately communicated throughout your organization.

3. Institutional fairness for the application of policies and procedures demands the consistent application of your policies and procedures across the globe.

For more information, check out The Compliance Handbook, 4th edition, here.

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Blog

Geopolitical Risks and Business Opportunities: Part 3 – Russia and Rebuilding Ukraine

I recently had the opportunity to visit with Dr. Ian Oxnevad, Director of Geopolitical Risk Intelligence at Infortal Worldwide. Global Risk Review, a podcast series that Infortal Worldwide sponsors was the reason for this visit. Dr. Oxnevad is a seasoned expert in geopolitical risk intelligence, with a Ph.D. in political science and a master’s degree in National Security Studies.

Over this five-part blog series, we will look at the risk profile for US Companies doing business in the following geographic regions: the Middle East, Latin America, Russia and Ukraine, Africa, and the Asia Pacific region. Over this five-part blog post series, we will review Dr. Oxnevad’s views in each one of these regions. Part 3 reviews the business opportunities and risks in Russia and the challenges and opportunities in rebuilding Ukraine.

Dr. Oxnevad deeply understands the issues in Russia and Ukraine. His belief that the upcoming rebuilding of Ukraine will spark a surge of interest from significant US corporations, the EU, and China, potentially resulting in increased corruption and geopolitical risks, shapes his perspective on the global implications and geopolitical risks. Oxnevad emphasizes the need for ongoing due diligence and monitoring by Western companies to navigate potential challenges and uncertainties, such as changes in laws and competition from different countries. He also acknowledges the significant risk of corruption in Ukraine, especially during the rebuilding process, and believes it may take time for EU institutions to mitigate this risk.

The war between Russia and Ukraine has had far-reaching consequences, not only for Europe but also for other parts of the world. Indeed, it has changed business across the globe forever.

One of the key factors to consider is the impact on global food supplies. Russia and Ukraine are major food and grain suppliers, and the war and sanctions have disrupted their production. This has put food supplies at risk, increasing food costs and inflationary pressures worldwide. Countries in Africa and the Middle East, in particular, heavily rely on these food supplies, and the uncertainty surrounding Ukraine’s ability to meet these demands raises concerns.

The rebuilding of Ukraine presents significant opportunities for major corporations from the United States, the European Union, China, and other countries. However, it also raises concerns about corruption and geopolitical risks. Ukraine has been traditionally viewed as a high-risk country for corruption, and the war has only exacerbated this issue. The chaos and emergency in the country create a greater incentive for corruption to exist. President Zelensky’s ability to address these concerns remains to be determined, and it is unlikely that corruption will disappear even if the war were to end abruptly.

From a geopolitical standpoint, the war between Russia and Ukraine has become a proxy war between Russia and the West and China and the West. This further complicates the situation and introduces additional risks. The resolution of the war and the lifting of sanctions will depend on various factors, including Russia’s political landscape and the leadership of President Putin. If Putin remains in power, the sanctions will likely stay in place. However, if there is a change in leadership, lifting sanctions could be a possibility, albeit with careful consideration of Russia’s economic and political landscape.

The rush to capitalize on Ukraine’s rebuilding presents both opportunities and risks. Many countries and corporations will be vying for a stake in Ukraine, increasing the incentives for corruption and other geopolitical risks. Competitors will be aware of the presence of different countries, further complicating the situation. It is crucial for American companies and others to carefully assess the risks associated with corruption in Ukraine and conduct thorough due diligence before engaging in business opportunities.

The international community, including the European Union, NATO, and the United Nations, may play a role in assisting Ukraine in its rebuilding efforts. Establishing the rule of law, policies, and procedures will ensure a successful reconstruction. However, the timing of international involvement is crucial. Rebuilding efforts must occur before existing EU institutions move in to address corruption, as this will help mitigate the associated risks.

In conclusion, rebuilding Ukraine has significant global implications and geopolitical risks. The disruption of food supplies, the rush to capitalize on opportunities, and the challenges associated with corruption must be carefully considered. The resolution of the war and the lifting of sanctions depend on various factors, including Russia’s political landscape. International assistance in rebuilding efforts, particularly in establishing the rule of law, will be crucial. However, it is essential to conduct thorough due diligence and assess the risks before engaging in business opportunities in Ukraine.

Please join us tomorrow when we explore geopolitical risks and business opportunities in Europe.

You can check Dr. Oxnevad in the full five-part Riskology podcast series here.

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Blog

Making the Business Case for Data Driven Compliance

I recently had the opportunity to visit with Vince Walden, founder and CEO of KonaAI, for a podcast series on the uses of data driven compliance. KonaAI is the sponsor of those podcasts. This blog post series will flesh out the podcast show notes. Over the next five blog posts, we will discuss generative AI and ChatGPT in compliance, the profiles of corrupt payments, making the business case for data-driven compliance, what to ask for and how to ask for it, and some success stories. Part 3 will discuss making the business case for data-driven compliance.

Vince Walden, the CEO and founder of KonaAI, is here with me as always. Walden pointed out a dual aspect to this, bringing risk and financial perspectives into play. The risk perspective aligns with meeting expectations from the Department of Justice, SEC, or other regulatory bodies, which include culture alignment and prudent data handling. The financial end deals with a knock-on effect of compliance: a potential improvement in financial performance by curtailing revenue leakage through fraud and improper payments. This is what compliance professionals do every day. In regulated industries, however, it is not simply about convincing others of the necessity. It is also about aligning the company’s tools and methods to meet the expectations of external regulatory bodies. In an ideal world, a company’s compliance goals should align with its business goals. But achieving this balance is easier said than done.

While regulatory compliance is important, businesses are about generating revenue and turning a profit. Balancing compliance with profitability can often seem like a tightrope walk. But businesses need to realize that this balance is possible and beneficial in more ways than one. Compliance and profitability could coexist with the help of a business-savvy compliance tool. Compliance professionals need to distance themselves from a narrow focus on policies and enforcement. A broader perspective, including understanding the importance of data-driven metrics and business context, can position these professionals as valuable contributors to an organization’s bottom line. Yet Walden warned against complacency, saying that professionals who only focus on regulation and leave the business aspect by the wayside can find themselves marginalized.

Increasingly, companies realize the value of having multiple perspectives at the decision-making table. While finance and internal audit have always been pivotal, including compliance in these discussions provides a more rounded view. This broad-based approach can unlock novel insights into operational efficiency, risk mitigation, and more. The dialogue between compliance, finance, and procurement has been improving. Industries like telecommunications, oil and gas, technology, and pharmaceuticals are leading this change, recognizing the value of integrated discussions. Vince stresses the need for transparency in transactions that pose risks to the organization and sees compliance professionals playing a significant role in these discussions.

One of the greatest challenges of being a compliance professional is speaking the language of the CFO and financial stakeholders. Convincing them about the monetary benefits of compliance involves more than just throwing around regulation jargon – it requires the ability to present your case strategically. Compliance professionals understand their audience and tailor their discussions accordingly. He advises professionals to focus on how data-driven compliance can save money, improve efficiencies, and prevent improper payments. This is how to get the CFO and other financial stakeholders on board and win them over with the business case for compliance.

Walden emphasizes the importance of understanding the CFO’s financial language to argue for effectively implementing data-driven compliance. Compliance professionals must demonstrate the return on investment and the success of compliance and fraud risk management programs. Key performance indicators such as dollar recoveries and risks avoided can be used to measure the impact of data-driven compliance. Walden also highlighted the significance of finding hidden money and stopping improper payments before they occur. By utilizing data-driven metrics, compliance professionals can identify the riskiest transactions and prevent fraud, waste, and abuse. This not only aligns with the DOJ’s expectations but also improves the overall functioning of the business.

Also of significance is the role of compliance professionals in finance and procurement. More and more companies are recognizing the need to have compliance professionals at the table when making financial decisions. Compliance professionals must be able to speak the language of CFOs and help them understand the importance of compliance in reducing costs, eliminating waste, and preventing improper payments.

To make a compelling business case, compliance professionals should focus on the financial benefits of data-driven compliance. For example, if a company disburses hundreds of millions or billions of dollars in accounts payable payments to third parties, implementing a risk scoring system can help identify the top ten riskiest transactions at risk for fraud, waste, and abuse. The company can recover millions of dollars by investing a relatively small amount, such as $200,000, resulting in a significant return on investment.

It is also important for compliance professionals to collaborate with finance, procurement, and internal audit teams. The Association of Certified Fraud Examiners (ACFE) and COSO collaborated on writing the COSO Fraud Risk Management Guide, which offers useful advice for running a fraud risk management program. The principles outlined in this guide align with the DOJ’s guidance on effective compliance programs. Compliance professionals should take the initiative to engage with CFOs, heads of accounting, and heads of internal audit to foster collaboration and ensure compliance efforts are aligned with overall business objectives.

Compliance professionals play a vital role in data-driven risk management. By making a compelling business case for data-driven compliance, they can demonstrate the financial benefits, such as preventing fraud, improving cash flow, and uncovering hidden funds. Collaboration with CFOs and other key stakeholders is crucial to ensure compliance efforts are integrated into overall business strategies. Compliance professionals must continue to adapt and evolve their understanding of finance and procurement to effectively communicate the importance of data-driven compliance in mitigating risks and driving business success.

Finally, remember that data-driven compliance can improve financial performance and ROI. By harnessing the power of data to inform compliance activities, professionals in regulated industries can effectively navigate complex regulatory landscapes, minimize risks, and optimize business operations. The steps in making a business case for data-driven compliance lay the foundation for success, enabling professionals to leverage data insights, drive informed decision-making, and, ultimately, drive better business outcomes. Embrace data-driven compliance and unlock the potential for improved financial performance and ROI—within your reach.

 Resources:

Connect with Vince Walden on LinkedIn

Check out KonaAI

Connect with Tom Fox on LinkedIn

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Principled Podcast

Season 10 Episode 1 – How Does the US Department of Justice Evaluate Ethics and Compliance Programs?

What you’ll learn on this podcast episode

The US Department of Justice Criminal Division has been increasingly vocal about what makes organizations’ ethics and compliance programs effective. This input on program effectiveness takes the form of guidance to prosecutors about what questions to ask when companies negotiate to resolve DOJ investigations into corporate wrongdoing on favorable terms. What does this guidance on program effectiveness mean in practice for E&C professionals? In the season 10 premiere of LRN’s Principled Podcast, host Susan Divers speaks with John Michelich, who retired last November after 35 years as a federal prosecutor with the Department of Justice’s Criminal Division. Listen in as they explore how the DOJ evaluates E&C programs, as well as best practices for companies settling misconduct investigations. 

Guest: John Michelich

John Michelich – Grayscale

John Michelich is a retired career prosecutor, who has served at the state, federal, and international levels for 45 years. A native of Illinois, John received his undergraduate education at Illinois Wesleyan University and then attended Drake University Law School in Des Moines, Iowa. For 10 years, John served as Assistant State’s Attorney and First Assistant State’s Attorney in Springfield, Illinois, where he prosecuted all types of state criminal felony violations including armed robbery, aggravated sexual assault and capital murder.   

In 1988, John moved to Washington, DC where he began his 35-year career as a prosecutor with the US Department of Justice, Criminal Division. As a federal prosecutor, John has handled a wide variety of cases including child pornography and obscenity, narcotics distribution and all types of white-collar criminal cases. John served for 30 years as a prosecutor with the Fraud Section of the Criminal Division where he handled numerous cases including health care fraud, bank fraud, telemarketing fraud, commodities and securities fraud and violations of the Foreign Corrupt Practices Act. Because Washington DOJ lawyers are traveling prosecutors, John has handled grand jury proceedings or jury trials in more than two dozen federal districts nationwide from Guam and Hawaii to Puerto Rico, and California to New York. Over his long career, John has tried dozens of jury trials to verdict.  

In 1998, the Justice Department sent John on loan to the United Nations’ International Criminal Tribunal for the Former Yugoslavia, also known as the War Crimes Tribunal, in the Hague, Netherlands, where he handled investigations and Tribunal proceedings involving crimes against humanity and serious breaches of the Geneva Convention that occurred during the Yugoslavian civil war.   

For over 40 years, John has been an active instructor of Trial Advocacy and has appeared regularly on the faculty of the NITA Trial Practice course offered at Georgetown University Law Center. In addition, John has served as an Adjunct Professor at Georgetown, teaching Trial Practice courses to third-year law students. In his retirement, John is available as a legal consultant to trial lawyers to advise them in preparation for jury trials and to consult with corporate counsel concerning internal investigations and to advise them on how to approach the government when there are allegations of wrongdoing, especially foreign bribery. 

John is licensed to practice in the states of Illinois and Iowa, and several federal courts, and is a licensed Solicitor of the Senior Courts of England and Wales.   

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.

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Blog

Profiles of Corrupt Payments

I recently had the opportunity to visit with Vince Walden, founder and CEO of KonaAI, for a podcast series on the uses of data driven compliance. KonaAI is the sponsor of those podcasts. This blog post series will flesh out the podcast show notes. Over the next five blog posts, we will discuss generative AI and ChatGPT in compliance, the profiles of corrupt payments, making the business case for data-driven compliance, what to ask for and how to ask for it, and some success stories. In Part 2, we will consider the profiles of a corrupt payment.

The episode highlighted research by MIT and KonaAI that examined $75 billion in payments from various companies to identify characteristics associated with high-risk payments. For businesses looking to identify and stop improper payments, the MIT and KonaAI research offered useful insights. Key attributes that were found to be associated with high-risk payments included payments made without purchase orders, payments flagged by anti-corruption keywords, and payments that significantly deviated from the norm. These attributes were often relevant in the data that humans tagged as high-risk.

One of the key takeaways from the research is the importance of investigating red flags in sales increases. A case study was presented in the episode, highlighting a suspicious sales increase in a Polish province. Contributions to a charitable organization came with increased sales, which raised questions about potential corruption or bribery. This case study emphasizes that compliance officers and risk professionals must monitor commissions, sales incentives, and margins to identify potential bribery and corruption issues.

Companies are encouraged to leverage data analysis tools like KonaAI to identify high-risk payments and prevent corporate corruption. These tools can help track and identify improper payments, providing transparency and easy access to financial accounting data for compliance professionals. By combining financial accounting data with data analysis capabilities, companies can gain insights into payment patterns and detect anomalies that may indicate potential corruption.

However, it is important to note that tradeoffs are involved in balancing different factors when identifying high-risk payments. Compliance officers and risk professionals must carefully consider the impact of their decisions on the business. The podcast episode highlighted the analogy of brakes on a car, emphasizing that the purpose of brakes is not to slow down but to enable the car to go fast and stop when necessary. Similarly, compliance efforts aim to facilitate business growth while ensuring ethical practices and preventing corruption.

The episode also discussed the challenges of identifying high-risk payments and preventing corporate corruption. One challenge is the need for collaboration among companies in an anonymous way to analyze the profiles of improper payments. The research conducted by MIT and KonaAI demonstrated the potential of such collaboration in identifying common risk triggers and profiles of high-risk payments. However, ensuring data privacy and confidentiality is crucial in such collaborative efforts.

In conclusion, identifying high-risk payments and preventing corporate corruption require a comprehensive approach that combines data analysis, collaboration, and a focus on business growth. The MIT and KonaAI research offers useful insights into the characteristics of high-risk payments. Compliance officers and risk professionals are urged to leverage data analysis tools and closely monitor payment patterns to detect and prevent improper payments. By balancing compliance efforts and business objectives, companies can mitigate corruption risks and foster a culture of transparency and integrity.

Examining data is like peering into a crystal ball that projects the inner workings of a business, but only if you know what to look for. One essential facet is sales performance. Even the tiniest irregularities can be a hint of greater issues at hand, such as improper payments. So, understanding and tracking sales data, be it a sudden sales surge in a particular area or an individual outperforming all expectations, is quite crucial.  Walden emphasized the importance of transparency in analyzing sales data. If figures shoot up in a specific region or uncannily exceptional sales are tied to a particular individual, Vince suggests investigating to find out more. The key here, he describes, is the ability to spot these oddities before they morph into a serious problem. Transparency in financial analysis, Vince implores us, can be a game-changer in tracking down and rectifying improper payments.

Third-party relationships can be as much a source of risk as any other part of a business. Keeping tabs on the financial activities of entities such as distributors, commission sales agents, and joint venture partners is therefore imperative. Monitoring these relationships to minimize the risks of improper payments. Walden suggests that the same strategies used to interpret company data for potential risks can also be utilized for third-party relationships. Compliance officers can pair financial analysis with tools like KonaAI to actively monitor anomalies or suspicious transactions. In this scenario, compliance officers can be armed with the right tools and data to monitor and, if required, mitigate any suspicious financial activities related to third-party relationships.

Extending data analysis to third parties is no longer nice; in today’s compliance and fraud-risk environment, it is a business necessity. Monitoring these outside relationships closely provides another layer of security and reduces the breeding ground for unethical activities like improper payments. By integrating financial data with tools like these, compliance officers can actively keep an eye out for anything unusual. This way, companies are not only ensuring that their internal affairs are in order but are also making sure that their external associations are clean and ethical. It’s an insight into how companies can use strategic data analysis to maintain regulatory compliance.

The bottom line is that compliance officers are the guardrails that keep a company on track. Their role is two-pronged – facilitate business growth and, at the same time, deter the business from veering off into unethical practices. Compliance officers ensure the company is always one step ahead in identifying and addressing compliance risks. A balance between growth enablement and ethical conduct is needed to steer the course towards success.

Finally, as compliance officers, you have the power to make a significant impact by preventing improper payments and preserving your organization’s reputation. By embracing the learnings from this podcast episode, you can confidently navigate the challenges of today’s complex business environment and ensure that your efforts contribute to a culture of transparency and ethical behavior. Together, we can create a stronger, more accountable business world.

Resources:

Connect with Vince Walden on LinkedIn

Check out KonaAI

Connect with Tom Fox on LinkedIn

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31 Days to More Effective Compliance Programs

One Month to More Effective Written Standards: Day 6 – Operationalization of your Code of Conduct

How can you work to operationalize your Code of Conduct as articulated in the DOJ 2023 Evaluation of Corporate Compliance Programs (ECCP)? The 2023 ECCP focuses not on whether a company has a paper compliance program but whether a company is actually doing compliance. A company does compliance by moving it into the functional business units as a part of an overall business process. That is what makes a compliance program effective at the business level. There are several different parts of the 2023 ECCP that touch upon your Code of Conduct.
The Code of Conduct design and implementation process enshrine your company’s values. Those are set by senior management and their input and support for any code project, whether initial draft or update, is critical. This gets to the heart of operationalization and demonstrates how a Code of Conduct can work to meet the DOJ requirements. As an early part of your design and drafting process, you should assemble a cross-functional team. This is important for several reasons. First, diversity in your team will help produce a more well-rounded final product. But having such team diversity will also assist in your benchmarking effort, coupled with those who are going to help you out looking at designs and maybe helping forge the design of the code. Finally, you can use a group to help in the drafting, redrafting and editing process. This diversity will help you to answer all of the DOJ questions from the 2019 Guidance in a manner consistent to support operationalization.
All of these requirements point to getting out and making your Code of Conduct a part of the very fabric of your organization. By using some or all of these strategies, you will have a good starting point. But it is more than simply rollout and training. There must be ongoing communications as well.

Three key takeaways:

  1. What has been the role of senior management in the creation or update of your Code of Conduct?
  2. How have you worked with employees outside the compliance function to lay the groundwork for fully operationalizing your Code of Conduct?
  3. How have you measured the effectiveness of your Code of Conduct training?

For more information, check out The Compliance Handbook, 4th edition, here.

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Innovation in Compliance

Innovation in Compliance – Dr. Laura Purdy on Revolutionizing Healthcare: The Power and Potential of Telemedicine

Innovation comes in many areas and compliance professionals need to not only be ready for it but embrace it. One of those areas is telehealth and telemedicine. My guest in this episode is Dr. Laura Purdy, a true evangelist for both telehealth and telemedicine.

Telemedicine in the Army has become crucial in providing healthcare to remote and deployed soldiers. Dr. Laura Purdy, a family medicine physician with a military background, has been at the forefront of this innovation. Telemedicine allows doctors to provide care remotely, improving access to healthcare in rural areas with limited services. However, the insurance industry’s lack of understanding hinders acceptance of telemedicine. Dr. Purdy encourages patients to try telemedicine, especially cash pay services, for more control over their healthcare choices. Scaling up a telehealth company requires careful consideration of being cash pay or accepting insurance. Regulatory challenges in telehealth include physician licensing, state laws, legal standards, and controlled substances. The future of telemedicine involves seamless integration of virtual and in-person care. Dr. Purdy’s company, AfD Health System, aims to provide accessible care and educational content through Instagram and a developing website. Overall, telemedicine has the potential to revolutionize healthcare delivery, but it requires greater acceptance, understanding, and comprehensive regulation.

Key Highlights

·      Telemedicine in the Army

·      Telemedicine: Improving Access to Healthcare

·      Challenges in Telehealth Regulation

·      The Future of Telemedicine

·      AfD Health System

 Resources

Dr. Laura Purdy on LinkedIn

DrLauraPurdy.com

Tom Fox

Instagram

Facebook

YouTube

Twitter

LinkedIn

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Blog

Geopolitical Risks and Business Opportunities: Part 2 – Latin America

I recently had the opportunity to visit with Dr. Ian Oxnevad, Director of Geopolitical Risk Intelligence at Infortal Worldwide. Global Risk Review, a podcast series that Infortal Worldwide sponsors was the reason for this visit. Dr. Oxnevad is a seasoned expert in geopolitical risk intelligence, with a Ph.D. in political science and a master’s degree in National Security Studies. Over this five-part blog post series, we will review Dr. Oxnevad’s views in each one of these regions. Part 2 reviews the business opportunities and risks in Latin America.

Dr. Ian Oxnevad is a highly regarded expert in global geopolitical risk, with special knowledge of Latin America. His extensive experience and understanding of the region’s shifting dynamics shape his perspective on Latin America’s geopolitical risks and business opportunities. Oxnevad identifies significant changes and instability in the region, including increased statism, corruption, and authoritarianism, as well as China’s growing influence, particularly in Brazil. He emphasizes the importance of due diligence and geopolitical risk intelligence, often overlooked by CEOs and political figures. He discusses the risks and potential opportunities for US businesses in Mexico, Venezuela, Cuba, Chile, and Ecuador.

Latin America is a region that is experiencing a rise in geopolitical risk and instability. With China increasing its presence in the region and concerns growing over corruption and authoritarianism, it is crucial for companies considering investment in Latin America to prioritize due diligence and geopolitical risk intelligence. Despite these challenges, the region is not on the sidelines of global events and offers potential business opportunities.

One of the popular strategies for US companies is nearshoring in Mexico. However, this approach comes with its own set of risks. Nationalization, political divisions, and crime are some of the factors that companies need to consider when investing in Mexico. It is important to conduct thorough research and analysis to understand the specific risks associated with each location within Latin America.

Dr. Oxnevad emphasized the importance of paying attention to Latin America regarding geopolitical risks and business opportunities. He pointed out that many CEOs and people in the political world view Latin America as being off the sidelines of major events worldwide, but this is far from the truth. Latin America is a dynamic region that requires careful consideration and attention.

Despite its challenges, Cuba can become a financial hub in Latin America. Its strategic location and favorable weather make it an attractive destination for businesses. However, significant reforms, regional ties, and US investment would be necessary to realize this potential. Cuba was historically a financial center in the Americas under Spanish rule. If it were to liberalize and attract investment, it could play a similar role in Latin America as the UAE does in Africa.

Additionally, simply looking at a map of the Caribbean Sea and the Atlantic Ocean reveals that Cuba is the best entry point for the northern Latin American continent from a transportation perspective. Cuba’s potential as a gateway to northeastern Latin America, particularly in shipping and transshipping, makes it an attractive business prospect. Finally, the Obama Administration’s initiative to open Cuba to US commerce, which the Trump Administration scuttled, shows an active consumer base for US goods, products, and services. When President Obama visited Cuba, over 2000 US business executives traveled to meet and assess the business opportunities.

Venezuela, on the other hand, presents a different set of challenges. The Venezuelan regime is hostile towards the US, and China has increased its presence there. This makes a significant opening for US businesses unlikely. Moreover, even if there is an opening, the pervasive corruption problem will make it difficult to do business with Venezuela. The national energy concern, PdVSA, is generally recognized as one of the most corrupt energy-related state-owned enterprises globally. Navigating doing business with PdVSA will be difficult and closely watched by US authorities.

Conversely, despite not being directly connected to the energy industry, Cuba has a better chance of opening up. The existing regime in Cuba relies on Raul Castro for legitimacy, and there is a greater likelihood of liberalization due to political reasons.

When considering business opportunities in Latin America, it is essential to assess the geopolitical risks associated with each country. Chile, for example, is considered safer than Ecuador due to its more pro-business body of law. However, Chile is internally divided, and there are pushes to increase authoritarianism. Ecuador, on the other hand, appears more unstable, with recent electoral violence. Conducting thorough screenings and assessments of each country’s legal framework, corruption levels, labor relations, and criminal risks is crucial for making informed decisions.

In conclusion, Latin America presents both geopolitical risks and business opportunities. Companies must conduct due diligence and gather geopolitical risk intelligence to navigate the challenges and tradeoffs. Latin America should be noticed, as it is a region actively involved in global events. By carefully considering the impact of geopolitical risks and making informed decisions, businesses can tap into the potential that Latin America has to offer.

Please join us tomorrow when we explore Geopolitical Risks and Business Opportunities in Russia and Ukraine.

You can check Dr. Oxnevad in the full five-part Riskology by Infortal podcast series here.

Categories
Data Driven Compliance

The Uses of Data Driven Compliance: Part 1 – What’s the Hype?

Welcome to Data Driven Compliance. In this podcast, we discuss how to use data to improve and enhance the effectiveness of your compliance program, creating greater business efficiency, all leading to more return on investment for your compliance regime. Join host Tom Fox as he explores how data will drive your compliance program to the next level. This podcast is sponsored by KonaAI.

I recently had the opportunity to visit with Vince Walden, founder and CEO of KonaAI, for a podcast series on the uses of data driven compliance. Over these five podcasts, we will discuss generative AI and ChatGPT in compliance, the profiles of corrupt payments, making the business case for data-driven compliance, what to ask for and how to ask for it, and some success stories. In Part 1, we ask, ‘What’s all the hype around generative AI and ChatGPT in compliance’?

Vince Walden is a seasoned professional in the field of generative AI and chatbots, with a particular focus on compliance monitoring. He firmly believes that these technologies have the potential to improve the efficiency and effectiveness of compliance monitoring significantly. Drawing from her extensive experience in technology-assisted review and his current role at KonaAI, Walden sees practical applications for generative AI in navigating compliance monitoring functions and interacting with data dashboards, eliminating manual intervention. However, he also acknowledges the potential pitfalls of over-reliance on generative AI, such as the risk of false statements and the need for fact-checking. Despite these challenges, Walden remains optimistic about the future of generative AI and chatbots in transforming the compliance industry and explains why you should.

Key Highlights:

  • The Evolution of Compliance Monitoring with Generative AI
  • Efficient Compliance Monitoring with Generative AI
  • The Importance of Fact-Checking ChatGPT
  • Customizable Compliance Monitoring Tool for Companies

Resources:

Connect with Vince Walden on LinkedIn

Check out KonaAI

Connect with Tom Fox on LinkedIn

Categories
Blog

Revolutionizing Compliance Monitoring with Generative AI and Chat GPT

I recently had the opportunity to visit with Vince Walden, founder and CEO of KonaAI, for a podcast series on the uses of data driven compliance. KonaAI is the sponsor of those podcasts. This blog post series will flesh out the podcast show notes. Over the next five blog posts, we will discuss generative AI and ChatGPT in compliance, the profiles of corrupt payments, making the business case for data-driven compliance, what to ask for and how to ask for it, and some success stories. In Part 1, we will consider using generative AI and ChatGPT for compliance.

My special guest is Vince Walden, a trailblazer spearheading transformative advancements in the compliance industry through the innovative use of data and data analytics. Vince’s grounding in generative AI and Chat GPT has enabled him to push the boundaries of traditional compliance monitoring. His knack for simplifying complex concepts has won him acclaim at numerous conferences, where he frequently shares his expertise. Vince’s novel strategies are revolutionary and rapidly becoming the new standard in the field.

Together with Walden, we will explore how compliance professionals can enhance their monitoring efficiency through generative AI and Chat GPT. Having worked extensively in the compliance and data arenas, Walden understands the challenges compliance professionals face in navigating the complex regulatory landscape. He shares his expertise and highlights practical use cases of Chat GPT in compliance monitoring, demonstrating how it can streamline the decision-making process. We will provide actionable strategies for improving compliance monitoring and addressing compliance professionals’ pain points.

You have probably heard of Generative AI. What is the hype about it? Generative AI does not just analyze data—it creates or “generates” responses or outputs based on the given data. Something like a brilliant virtual assistant! Walden discussed some of the uses. He mentioned how these AI chatbots can interact directly with a compliance dashboard. This means it is more than simply about reading data—it is about interpreting it and helping make navigating tons of data more accessible. It provides recommendations, insights, and options based on what it’s looking at. This could eliminate the need to click around on your dashboard.

AI is pretty good with data. But what about qualitative information? You might be wondering if you can leave everything entirely to AI. Walden adds a bit of a reality check here by reminding us of the importance of human intervention in checking the AI’s output. There is a downside to relying exclusively on AI’s output. A compliance professional must take results at face value. There is a need for validation and fact-checking to ensure we’re not accidentally spreading misinformation or making decisions based on false statements. It’s like that saying, “Trust but verify.”

One of the key challenges associated with generative AI and chatbots in compliance monitoring is striking the right balance between automation and human oversight. While chatbots can assist in navigating and analyzing data, human judgment and expertise are still crucial in interpreting the results and making informed decisions. Compliance professionals must ensure that the rules and algorithms used by the chatbots are accurate and aligned with regulatory requirements.

Another consideration is data privacy and security. Using generative AI and chatbots within a secure platform that protects sensitive information is essential. Compliance professionals should avoid sending data to third-party providers and ensure privacy regulations are followed.

Despite these challenges, generative AI and chatbots in compliance monitoring are promising. By leveraging these technologies, compliance teams can improve efficiency, reduce costs, and enhance the overall effectiveness of their monitoring processes. The ability to customize review strategies based on different risk thresholds and areas of concern further enhances the value of these tools.

The bottom line is that generative AI and chatbots are set to revolutionize compliance monitoring by providing professionals with more efficient and interactive ways to navigate data and identify potential compliance issues. While there are tradeoffs and challenges to consider, the benefits of these technologies in terms of efficiency and cost-effectiveness are significant. Compliance professionals must exercise caution, fact-check the output of generative AI, and maintain human oversight to ensure accuracy and compliance with regulations. As compliance monitoring continues to evolve, the integration of generative AI and chatbots will undoubtedly play a crucial role in shaping its future.

The steps outlined in the article – leveraging generative AI and Chat GPT for compliance monitoring – are pivotal in helping compliance professionals achieve improved monitoring efficiency. By using generative AI to analyze large volumes of data in real time, compliance professionals can detect anomalies and potential violations more efficiently than ever. Additionally, the automation of compliance checks through Chat GPT significantly reduces the burden of manual reviews and frees up valuable time for proactive monitoring activities. These technological advancements enhance monitoring accuracy and streamline the decision-making process, allowing compliance professionals to make informed and timely decisions. By adopting these innovative tools, compliance professionals can achieve improved compliance monitoring results and ensure organizational adherence to regulations.

 Resources:

Connect with Vince Walden on LinkedIn

Check out KonaAI

Connect with Tom Fox on LinkedIn