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Data Driven Compliance

Data Driven Compliance: Current Trends and Innovations

Do you need help keeping up with your business’s ever-changing compliance programs? Look no further than Tom Fox’s award-winning Data-Driven Compliance podcast, which features an in-depth discussion about the uses of data and data analytics in compliance programs. Data-Driven Compliance is back with another exciting episode. Today, we take things differently by posting a webinar sponsored by KonaAI entitled “Data Driven Compliance: Current Trends and Innovations.” Vince Walden hosted Tom Fox and Rayne Towns.

Tom Fox and Rayne Towns are seasoned professionals in the field of compliance. Fox is a leading authority in the industry and the Compliance Podcast Network’s founder. Towns are Nokia’s global head of ethics and compliance, risk, and monitoring. Fox thinks that risk management and fraud prevention strategies based on data are the next steps in the compliance field. He stresses how important data analytics are for making compliance programs work better. He also acknowledges the need for human interpretation and utilization of the data.

On the other hand, Towns sees data-driven compliance strategies to strengthen and improve the compliance program’s effectiveness, using data analytics to identify and address gaps in the compliance program. She also emphasizes the importance of prioritizing and starting with solving specific problems when implementing data analytics. Join Vince Walden, Tom Fox, and Rayne Towns on this Data Driven Compliance podcast episode to learn more about their perspectives on data-driven risk management and fraud prevention compliance strategies.

Highlights Include:

  • Transforming Compliance Through Data Analytics
  • Effective Strategies in Compliance and Risk Management
  • The Role of Data Analytics in M&A Compliance
  • Leveraging diverse data sources for risk assessment
  • Managing Risks: Vendors, Customers, and Employees
  • Strengthening Compliance Programs Through Team Collaboration
  • The Power of Generative AI in Compliance
  • Enhancing Compliance Programs with Predictive Models
  • Factors Influencing Budget Approvals and Getting Budget

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KonaAI

 Tom Fox 

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Data Driven Compliance: Current Trends and Innovations

Data-driven compliance strategies have become a game-changer in risk management and fraud prevention. I recently had the opportunity to participate in a KonaAi-sponsored webinar entitled “Data Driven Compliance: Current Trends and Innovations.” The event was hosted by Vince Walden and featured Rayne Towns, the Global Head of Risk and Monitoring at Nokia.

I view data-driven compliance strategies in risk management and fraud prevention as an evolution of the compliance profession. It can be seen in the importance of data analytics in improving the effectiveness of compliance programs. There is and will always be the need for human interpretation and utilization of the data. Towns see data-driven compliance strategies as a way to strengthen and improve the compliance program’s effectiveness, using data analytics to identify and address gaps in the compliance program. She also emphasizes the importance of prioritizing and starting with solving specific problems when implementing data analytics. Vince Walden joined in with his perspective on data-driven compliance strategies in risk management and fraud prevention.

Data driven compliance is one more in the evolution of the compliance profession, one more step. Fortunately, we have evolved from when compliance was very much legal driven by lawyers. And over time, most compliance professionals (and equally importantly, the DOJ and SEC) began to view compliance as a business process. As a business process, it can be measured, it can be studied, it can be monitored, and it can be approved based on that information.

We began with the importance of data analytics in compliance programs. The shift towards data-driven compliance has transformed the profession from solely legal-driven to a measurable and improvable business process. This shift has been recognized by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). The SEC first called out the use of data analytics, as it did in the Order concluding the Key Energy FCPA enforcement action. Most recently, the Albemarle FCPA resolution specifically called out the company’s use of data analytics in its remediation program, which occurred during the pendency of its FCPA resolution process.

In 2016, the Securities and Exchange Commission called out data analytics in an enforcement action for the first time. It was the Key Energy FCPA enforcement action, where they suggested data analytics would have shown or demonstrated a range of values outside the norm for certain gifts, travel, and entertainment for the company. This demonstrated that regulatory thinking evolved as well. Now, data analytics has become a critical element to improve the business process of compliance. Data driven compliance allows you to measure it, monitor it, and improve it all in a documented fashion so that if a regulator ever comes knocking, you can demonstrate to them not only the effectiveness of your compliance program but also how you are moving your compliance regime forward based on solid data and analysis.

AB InBev was one of the first companies to successfully implement data-driven compliance strategies, moving from detection to prevention of issues. This shift has resulted in cost savings and improved risk management for the company. Equally significant was the company’s public discussion of the BrewRight program and how it evolved into a broader business process tool.

The DOJ always telegraphs what is important to them. Starting 2020 with the 2020 Update to the Evaluation of Corporate Compliance Programs, they said the CCO must have access to all data across an organization. You may have data silos, but a CCO must be able to punch through all of those data silos. It is a natural progression from 2020 to this Albemarle FCPA enforcement action, where the DOJ clearly stated that the company’s data analytics program allowed them to move forward with the remediation.

Moreover, the critical part was that Albemarle was not required to have a monitor. To avoid having a monitor required under the resolution required two things. One, an effective compliance program, but two, testing of it. And the DOJ has made very clear those requirements. Albemarle had an effective compliance program, but more importantly, they have monitored it and tested it through their data analytics program. Their compliance function’s actions saved the company millions. And it tells the rest of us what the DOJ will look for in a compliance program going forward.

Data analytics plays a crucial role in various aspects of compliance, including M&A due diligence and risk assessment. By leveraging external data sources, compliance professionals can gain valuable insights into potential risks associated with vendors, customers, and employees. This information allows them to make informed decisions and mitigate risks effectively.

Compliance professionals must be aware of the importance of data-driven compliance strategies’ impact on decision-making. Using data analytics, compliance professionals can measure, monitor, and improve compliance programs in a documented fashion. This demonstrates the compliance program’s effectiveness and enables organizations to adjust and adapt more quickly to changing regulatory requirements.

However, implementing data-driven compliance strategies comes with its own challenges. Balancing the tradeoffs between automation and manual processes is one such challenge. While automation can streamline compliance processes and identify gaps, manual touches are sometimes necessary. Data analytics can help identify these gaps and drive accountability and training efforts.

There is great potential for new technologies like generative AI and machine learning to enhance compliance programs. These technologies can make compliance processes more efficient and enable better decision-making. For example, generative AI can guide users through dashboards and provide valuable insights, making compliance tasks easier and more effective.

Budget approvals are another crucial consideration for organizations when implementing data-driven compliance strategies. CFOs prioritize keeping the business out of legal risks and fines, fraud prevention and recoveries, and improved internal controls. Data analytics is not just a “nice-to-have” but a “must-have” for organizations. Those that do not embrace data analytics or fail to move towards it are at risk.

In conclusion, data-driven compliance strategies have revolutionized the compliance profession. Organizations can measure, monitor, and improve compliance programs by leveraging data analytics, resulting in cost savings, improved risk management, and better decision-making. While there are challenges associated with implementing data-driven compliance strategies, the benefits far outweigh the tradeoffs. Compliance professionals must embrace data analytics as a critical element of their compliance programs to stay ahead in an ever-evolving regulatory landscape.

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Data Driven Compliance

The Uses of Data Driven Compliance: Part 5 – Compliance Successes Using Data Driven Compliance

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 have discussed generative AI and ChatGPT in compliance, the profiles of a corrupt payment, making the business case for data-driven compliance, what to ask for and how to ask for it, and some success stories. In this concluding Part 5, we will look at some compliance successes using a data driven approach.

In the world of business, compliance is a critical aspect that ensures organizations adhere to legal and ethical standards. Compliance not only helps companies avoid legal troubles but also plays a significant role in improving business efficiency and profitability. In this episode, Tom and Vince considered the advanced compliance tools for fraud detection and cost savings. Our discussion entailed a comprehensive analysis of the key factors that impact advanced compliance tools for fraud detection and cost savings, exploring the tradeoffs involved, the challenges faced, and the importance of considering the impact on decision-making.

Key Highlights:

  • Invoice Price Discrepancy Detection and Recovery
  • Compliance-driven Efficiency through Fraud Risk Analysis
  • Shifting Travel Expenses for Manufacturing Observations
  • Integrating Multiple Data Sources for Fraud Detection

Resources:

Connect with Vince Walden on LinkedIn

Check out Kona AI

Connect with Tom Fox on LinkedIn

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Compliance Successes Using 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 a corrupt payment, making the business case for data-driven compliance, what to ask for and how to ask for it and some success stories. In this Part 5, we will look at some compliance successes using a data-driven approach.

As always, I am joined by Vince Walden, founder and CEO of KonaAI. There is a quiet revolution happening in the realm of compliance. It’s one that, if harnessed correctly, can turn a typically reactive process into a proactive strategy. I am of course talking about data-driven compliance. By making use of the vast amounts of data your organization collects, you can uncover potential compliance risks before they turn into actual problems. This approach can be a game-changer, not just for your role as a compliance officer, but also for your organization’s overall risk management strategy. No longer will you be caught off guard. Instead, you’ll be leading the charge, armed with real-time insights and actionable data.

Sometimes, we face unintended consequences in a business setting – consequences that occur unexpectedly because of actions taken. They could be beneficial, like improvements to the business or reduced costs. Or, they could point to underlying issues that need addressing. However, these consequences can become visible only when multiple risk triggers are considered. Here’s the interesting bit. Vince underscored the importance of considering multiple risk triggers when analyzing data. Relying on just one test or indicator won’t cut it. It isn’t just one anomaly that signals an issue. The convergence of multiple risk signals helps in identifying the potential problem areas.

Compliance is not simply about rules and regulations. It is about understanding and managing risks, ultimately leading to better business decision-making. When well-executed, it can yield great rewards or “compliance wins”. One example is identifying high-risk areas in your business and managing them proactively. A high-risk business unit in high-risk FCPA environments. By analyzing their fraud risks, the company found that salespeople wound up spending quite a bit on gifts, travel, and entertainment for foreign officials to secure a sale. The solution? Limit setting. Not only did it save them money, but decreased the sales cycle, and the cherry on top – a clientele of higher quality.

Using data analysis techniques to improve business efficiency is of utmost importance in today’s business environment. By leveraging data analysis, you have the power to identify bottlenecks, streamline processes, and optimize your operations. This not only saves time and resources but also enhances overall compliance and risk management efforts. With every step you take towards harnessing the power of data, you are paving the way for increased business efficiency and success in your industry.

Compliance is the critical aspect that ensures organizations adhere to legal and ethical standards. Compliance not only helps companies avoid legal troubles but also plays a significant role in improving business efficiency and profitability. Data driven  of advanced compliance tools for fraud detection and cost savings was discussed. This article aims to provide a comprehensive analysis of the key factors that impact advanced compliance tools for fraud detection and cost savings, exploring the tradeoffs involved, the challenges faced, and the importance of considering the impact on decision-making.

One of the advanced compliance tools discussed in the episode is Unit Price Analysis. This tool utilizes advanced technology to identify discrepancies in vendor invoices, potentially saving companies significant amounts of money. By comparing prices charged for the same product by the same vendor in different locations, contract compliance can be achieved. As Walden explained, even a small difference in unit prices can translate into substantial recoveries when multiplied by tens of thousands or hundreds of thousands of units. This tool highlights the importance of scrutinizing vendor invoices and ensuring fair pricing across different locations.

To effectively detect fraud and ensure compliance, it is crucial to integrate multiple data sources into compliance monitoring programs. As Vince Walden mentions, transparency is key, and integrating various data sources brings that transparency into play. By pulling in third-party payments, due diligence work, sanctions lists, whistleblower hotline data, and other indicators, companies can gain actionable insights and identify improper payments and risk scoring. The ability to put in multiple risk triggers and analyze data from various sources allows for a more comprehensive and accurate assessment of potential risks.

However, implementing advanced compliance tools for fraud detection and cost savings is not without its challenges. It is essential to know when to stop reviewing transactions or high-risk activities. Risk scoring frameworks help prioritize the most critical transactions, but continuous improvement is necessary to update the models and identify any missed risk triggers. Additionally, the complexity of integrating multiple data sources and implementing advanced compliance tools requires careful planning and consideration.

The impact of advanced compliance tools for fraud detection and cost savings goes beyond financial benefits. These tools can change the character of the people who interact with the company. By shifting the responsibility of travel expenses to foreign officials, the company not only achieved significant cost savings but also attracted decision-makers who came to sign contracts. This unexpected outcome demonstrates the power of compliance and fraud risk prevention in improving business efficiency and quality of customers.

In conclusion, advanced compliance tools for fraud detection and cost savings play a crucial role in ensuring legal and ethical standards are met while improving business efficiency and profitability. Unit Price Analysis and Fraud Risk Analysis are just two examples of such tools discussed in the podcast episode. By integrating multiple data sources, implementing risk scoring frameworks, and continuously improving compliance models, companies can achieve transparency, identify risks, and make informed decisions. However, it is important to consider the challenges and tradeoffs involved in implementing these tools. Ultimately, the impact of advanced compliance tools extends beyond financial benefits, positively influencing the overall business environment.

Resources:

Connect with Vince Walden on LinkedIn

Check out Kona AI

Connect with Tom Fox on LinkedIn

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Data Driven Compliance

The Uses of Data Driven Compliance: Part 4 – What to Ask For and How to Ask For It

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 a corrupt payment, making the business case for data-driven compliance, what to ask for and how to ask for it, and some success stories. In Part 4, we discuss what data a CCO needs to ask for and how to do so.

Vince Walden brings knowledge and experience in continuous compliance monitoring and risk assessment processes. Walden’s perspective on the topic is that it should be approached as a journey, not a one-time program. He emphasizes the importance of proactive risk assessments and continuous monitoring, advocating for an iterative approach demonstrating constant improvement in compliance efforts. This perspective is shaped by his belief that meeting regulatory expectations requires a diligent and ongoing commitment to improvement.

Walden also suggests that data sources should be identified based on the results of the fraud risk assessment and that the ease of obtaining the data should be considered when prioritizing analytics projects. To delve deeper into what data a CCO should ask for and how to ask for it, join Tom Fox and Vince Walden on this Data Driven Compliance podcast episode.

Key Highlights:

  • Continuous improvement through risk assessments and monitoring
  • Effective risk assessment through diverse data sources
  • Uncovering hidden relationships through expense categories

Resources:

Connect with Vince Walden on LinkedIn

Check out Kona AI

Connect with Tom Fox on LinkedIn

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What Data to Ask For and How to Ask for It

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, and we will discuss generative AI and ChatGPT in compliance, the profiles of a corrupt payment, making the business case for data-driven compliance, what to ask for and how to ask for it and some success stories. In Part 4, we will explore what data to ask for and how to ask for it.

As always, I am joined by Vince Walden, founder and CEO of KonaAI. There is a quiet revolution happening in the realm of compliance. It’s one that, if harnessed correctly, can turn a typically reactive process into a proactive strategy. I am, of course, talking about data-driven compliance. By using the vast amounts of data your organization collects, you can uncover potential compliance risks before they become actual problems. This approach can be a game-changer for your role as a compliance officer and your organization’s overall risk management strategy. No longer will you be caught off guard. Instead, you’ll lead the charge with real-time insights and actionable data.

Imagine a world where compliance isn’t a headache but a strategic advantage. You’re not constantly putting out fires but predicting and preventing them. It might sound like a dream, but it doesn’t have to be. How so? Well, by adopting a data-driven approach to compliance. This innovative method allows you to identify, assess, and manage potential compliance risks based on actual data. It’s about staying one step ahead, making informed decisions, and truly adding value to your organization. It’s not just about avoiding penalties and meeting regulations anymore. It’s about creating an environment of continuous improvement and proactive risk management.

Let’s paint a picture. You’re in a game of chess. But in this game, you’re not just reacting to your opponent’s moves. You’re anticipating them, strategizing, and making proactive decisions. That’s the power a data-driven approach to compliance can bring to your role as a compliance officer. It’s more than just crunching numbers and keeping up with regulations. It’s about leveraging the power of data to identify and mitigate risks before they materialize. It’s about transforming compliance from a cost center into a strategic asset. So, if you’re curious about how to make this data-driven shift, buckle up because we’re about to dive deep into this transformative realm.

Compliance monitoring and risk assessment are crucial components of any effective compliance program. In a recent episode of the podcast “Data Driven Compliance,” hosted by Tom Fox and featuring Vince Walden, the topic of continuous compliance monitoring and risk assessment process was explored in depth. This article aims to comprehensively analyze the critical factors that impact this process, discuss the tradeoffs involved in balancing different factors, and explore the challenges associated with other approaches.

Vince highlighted the importance of starting with a fraud risk assessment. This initial step allows organizations to identify high-frequency and high-impact risks and implement mitigating controls. Compliance professionals can prioritize their efforts and focus on the most critical areas by assessing the likelihood and impact of various risks on a scale of one to ten.

Data sources play a crucial role in risk assessment. Financial accounting systems and third-party data are valuable sources of information for identifying and mitigating risks. Tracking and categorizing expenses in accounting systems is significant for identifying anomalies and assigning risk scores. Vince highlighted the significance of having a centralized system, such as the Kona platform, to streamline this process.

However, relying solely on analytics without integrating them into the fraud risk assessment would be best. He emphasized the need for alignment between data analysis and risk assessment to ensure efforts are focused on addressing the identified risks. Simply conducting data analytics without considering the underlying risks may not yield meaningful results.

One of the challenges in continuous compliance monitoring and risk assessment is the availability and accessibility of data. Some data sources may need help, requiring compliance professionals to prioritize based on the ease of data acquisition and its value. For example, if faced with choosing to conduct a data analytics project in Brazil or China, Walden suggested starting with Brazil due to the relative ease of obtaining data from that region.

Another challenge lies in the scope of compliance monitoring. Walden emphasized that compliance monitoring is not a one-time, all-encompassing effort. It is a journey that involves proactively assessing risks and monitoring them from location to location. Compliance professionals should focus on demonstrating continuous improvement rather than tackling all threats at once. This approach aligns with regulators’ expectations of an effective due diligence program.

In addition to the primary focus on risk assessment, Walden highlighted the importance of considering ancillary areas of inquiry. For instance, looking at places such as charitable donations or marketing spending can provide valuable insights into potential risks of bribery or corruption. The KonaAI tool can help correlate these ancillary data points and provide a more comprehensive view of compliance risks.

In conclusion, continuous compliance monitoring and risk assessment require a thoughtful and balanced approach. Organizations can identify and prioritize risks, starting with a comprehensive fraud risk assessment. Data sources, such as financial accounting systems and third-party data, play a crucial role in this process. However, aligning data analytics with the identified risks is essential to ensure meaningful results. Compliance professionals should also consider the data availability challenges and scope of compliance monitoring. Organizations can meet regulatory expectations and enhance their compliance programs by demonstrating continuous improvement and considering ancillary areas of inquiry.

Resources:

Connect with Vince Walden on LinkedIn

Check out KonaAI

Connect with Tom Fox on LinkedIn

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Data Driven Compliance

The Uses of Data Driven Compliance: Part 3 – Making the Business Case for Data Driven Compliance

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 a corrupt payment, making the business case for data-driven compliance, what to ask for and how to ask for it, and some success stories. Part 3 discusses how to make the business case for data-driven compliance.

Vince Walden, a seasoned professional with over 25 years of experience in compliance and risk management, is the founder and CEO of KonaAI, a software company specializing in automating data management for compliance and fraud risk management. Walden believes that compliance professionals play a crucial role in data-driven risk management. He emphasizes the need for these professionals to make a business case for data-driven compliance to both risk professionals and the CFO or head of operations.

According to Walden, data-driven compliance not only aligns with regulatory expectations and avoids risks, but it also improves the overall functioning of the business by identifying hidden money, reducing costs, eliminating waste and fraud, and preventing improper payments. His perspective is shaped by his extensive experience in the field, including his work as a consultant, fraud investigator, and forensic technologist. Join Tom Fox and Vince Walden as they delve deeper into this topic on this episode of Data Driven Compliance.

Key Highlights:

  • The Importance of Data Driven Compliance
  • Effectively Conveying Compliance Value to CFOs
  • The Impact of Data Driven Compliance
  • Maximizing Compliance ROI through Risk Mitigation

Resources:

Connect with Vince Walden on LinkedIn

Check out Kona AI

Connect with Tom Fox on LinkedIn

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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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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

Categories
Data Driven Compliance

The Uses of Data Driven Compliance: Part 2 – Profiles of a Corrupt Payment

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 and leading to a higher 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 Kona AI.

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 2, we explore the profiles of corrupt payments.

Vince Walden is an expert in identifying high-risk payments and preventing corporate corruption. His belief in the ability of data analysis and collaboration to find patterns and warning signs shapes his viewpoint on these issues. He shares his experience from a research project where companies collaborated anonymously to analyze the profiles of improper payments, using risk-scoring transactions and applying anti-corruption tests to identify high-risk attributes. Vince emphasizes the importance of transparency and access to data to proactively investigate suspicious activities, serving as a guardrail to prevent potential corruption. Join Tom Fox and Vince Walden as they delve deeper into this topic on this Data Driven Compliance podcast episode.

Key Highlights:

  • Attributes of High-Risk Payments Analysis
  • Uncovering Suspicious Sales Spikes in Poland
  • Detecting Improper Payments with Data Analysis

Resources:

Connect with Vince Walden on LinkedIn

Check out Kona AI

Connect with Tom Fox on LinkedIn