Tag: continuous monitoring

One of the critical elements found in the 2020 Update is the need to use the information you obtain, whether through risk assessment, root cause analysis, investigation, hotline report or any other manner to remediate the situation which allowed it to arise. Your company should establish a regular monitoring system to spot issues and address them. Effective monitoring means applying a consistent set of protocols, checks, and controls tailored to your company’s risks to detect and remediate compliance problems on an ongoing basis. To address this, your compliance team should be checking in routinely with local finance departments in your foreign offices to ask if they have noticed recent accounting irregularities. Regional directors should be required to keep tabs on potential improper activity in the countries in which they manage. These ongoing efforts demonstrate that your company is serious about compliance.
It is a function of the CCO to reinforce the vision and goals of the compliance function, where assessment and updating are critical to an ongoing best practices compliance program. If you follow this protocol, you will put a mechanism in place to demonstrate your company’s commitment to compliance by following through on intentions as set forth in your strategic plan. What should you do with this information? Put a strategic plan in place ready to implement your findings of continuous improvement, by using the following:

• Review the goals of the strategic plan. This requires that you arrange a time for the CCO and team to review the goals of the Strategic Plan, which the CCO should lead to determine how this goal in the Plan measures up to its implementation in your company.
• Design an execution plan. The KISS method (Keep it Simple Sir) is the best to move forward. This would suggest that for each compliance goal, there should be a simple and straight forward plan to ensure that the goal in question is being addressed.
• Put accountabilities in place. In any plan of execution, there must be accountabilities attached to them. This requires the CCO or other senior compliance department representatives to put these in place and then mandate a report requirement on how the task assigned is being achieved.
• Schedule the next review of the plan. There should be a regular review of the process. It allows any problems which may arise to be detected and corrected more quickly than if meetings are held at a less frequent basis.

Continuous monitoring is a key step but it is only the first step. It is not simply that you tested your compliance program but that you did something with the information you obtained to improve your program.
Three key takeaways:

1. Innovation can come through a new way to think about and use data going forward.
2. Have a plan in place to use the information garnered in your monitoring incorporated back into your compliance program.
3. Always remember that Document Document Document is critical if the regulators come knocking.

I want to next focus specifically on the tactical steps of moving towards both continuous monitoring and continuous improvement of your compliance program. These twin concepts are perhaps the biggest modifications in the 2020 Update. The changes began in Section 1- Risk Assessments. The question-by-question analysis begins with “Is the periodic review limited to a “snapshot” in time or based upon continuous access to operational data and information across functions?” Do you have access to continuous and real time transactional data at your organization? How about across silos within your organization. Most likely the answer to both is “no”. This means you no longer have a best practices compliance program at this point in time. How can you garner such information?
While there is only one question in the Lessons Learned section, it is a compound question. It not only inquiries about data you may have obtained through your own work but also from other company’s in your industry operating in the same geo-region. Without commenting on the potential anti-trust aspects of this issue, if there is public source information available to you (and there always is), how are you using this information in your compliance regime. But this can be simply having your fully operationalized employee base keeping their eyes and ears open at trade show or any other gatherings of industry employee.
The next area for continuous monitoring and continuous improvement was in an area of compliance which is not normally associated with those concepts, Policies and Procedures. The final area in the 2020 Update for consideration is appropriate called Continuous Improvement, Periodic Testing and Review and is found in the subsection monikered Evolving Updates. It reads:
How often has the company updated its risk assessments and reviewed its compliance policies, procedures, and practices? Has the company undertaken a gap analysis to determine if particular areas of risk are not sufficiently addressed in its policies, controls, or training? What steps has the company taken to determine whether policies/procedures/practices make sense for particular business segments/subsidiaries? Does the company review and adapt its compliance program based upon lessons learned from its own misconduct and/or that of other companies facing similar risks?
Similar to the language under Risk Assessment, this compound question considers the adaptation of a compliance program from your own lessons learned but also from other companies. The distinction now is that phrase is “other companies facing similar risks”? Think about how this language would apply to any company operating in China, West Africa or any other high-risk region in the globe. I would interpret this to mean every Chief Compliance Officer (CCO) and compliance practitioner needs to stay abreast of international anti-corruption enforcement actions where your company may be doing business.
Three key takeaways:

1. What is your process for continuous monitoring?
2. What is your process for continuous Improvement?
3. What source of information do you use that are outside your organization?