Tag: red flags

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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program for 3rd Parties-Evaluation of Due Diligence With Candice Tal

An important part of the job duties of any compliance practitioner is clearing red flags which might appear for a proposed third-party relationship during the due diligence process. It is mandatory that not only must all red flags be cleared but there also be evidence of the decision-making process to show to a regulator if one comes knocking. Around third-parties, consider what risks you face in both your sales and supply chain. If there is a key player several tiers down the line who creates or builds a key component or delivers a critical service, you may want to put more management around that relationship from the compliance perspective.

For anything below a tier 2; you may be able to manage your risks through having your direct tier one counter-party take the lead in managing such compliance risks. But make sure that the expectation is communicated to your direct counter-party so that if the government comes knocking you can show that not only did you contractually obligate your direct counter-party to do so but that you provided them the tools and training to do so. Finally, you will need to be able to show that your direct counter-party did so.

Three key takeaways:

  1. There is no set formula for clearing of red flags or the evaluation of due diligence.
  2. Know when to say enough has been done.
  3. You must “Document, Document, and Document” your evaluation of any red flags.
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Innovation in Compliance

Gini Dietrich on Spotting Red Flags


 
This week’s guest on Innovation In Compliance is Gini Dietrich, CEO and founder of Spin Sucks. Gini is a writer, blogger, speaker and all-around expert in the PR space. She recently wrote a blog post entitled, How to Spot Red Flags in New Business Relationships, which is the focus of her discussion with Tom Fox in this week’s show.
 

 
Trust Your Instincts
Tom asks Gini what inspired the blog post. She responds that she actually wrote the blog post as a reminder to herself to always look for red flags and always listen to her gut. She says that when you’re contemplating a prospective business relationship, there are a few questions you should always ask yourself. Do you see red flags? Can you get past them because there are other advantages? Should you discontinue the conversation and save yourself time, angst, money and resources in the long run? In the PR space, the most common red flag is unrealistic expectations, Gini explains.
Why? Why? Why?
Gini points out the importance of writing down red flags. For one thing, it makes them more concrete; and for another thing, you can take your questions into your meetings to remind yourself to ask certain questions if red flags arise. You should be constantly evaluating your business relationships. Ask follow up questions. Gini advocates asking why at least three times. Tom comments that the compliance industry uses that exact technique; it’s called root cause analysis.
Learn to Say No
Tom asks, “Why is the ability to say no critical for business owners and compliance professionals?” Gini responds that in business relationships if you can’t find any red flags then it’s usually going to be a good relationship. The inverse is also true: if there are red flags then the relationship is usually going to be difficult. The other reason why being willing to say no is important is that in the PR business as in compliance, you’re selling your time and you can’t scale that. So it’s critical to say no to things that will take your time away from what you should be doing. Tom mentions that part of Gini’s process is to try to disqualify every prospect. She comments that looking for reasons to disqualify a prospect, and finding them, makes it easier to say no to them. She shares tips on what red flags might look like from the employee and client perspective.
Resources
SpinSucks.com
How to Spot Red Flags In New Business Relationships