Compliance and Ethics: Ideas & Answers. Edition 19

Dear friends,

Welcome to the nineteenth edition of Compliance and Ethics: Ideas & Answers!

Today, we'll start with?an interesting piece on sensing great disturbances in the force by Adam Balfour . Then we will understand the top 4 secrets of a successful ethics and compliance program by Jim Brennan , before ending with an inquisitive piece on risk assessment for small companies by Jeff Kaplan .

As always, there's more content on?our website ?so please do visit that to read our other articles.

Thank you, Joe.

Sensing great disturbances in the force

by Adam Balfour

Obi-Wan Kenobi was able to detect “a great disturbance in the Force, as if millions of voices suddenly cried out in terror and were suddenly silenced” and could tell “something terrible has happened” even though he was physically far from where the event occurred (when the planet Alderaan was destroyed by the Death Star). Not only do we not have light sabers, but ethics and compliance officers have also not yet figured out a way to use the Force to detect risks and wrongdoing. Check out this week’s #SundayMorningComplianceTip for a Star Wars inspired tip about how data analytics can help and let me know what you think.

Obi-Wan Kenobi was able to detect "a great disturbance in the Force, as if millions of voices suddenly cried out in terror and were suddenly silenced" and could tell "something terrible has happened" even though he was physically far from where the event occurred (when the planet Alderaan was destroyed by the Death Star).

Not only do we not have light sabers, but ethics and compliance officers have also not yet figured out a way to use the force to detect risks and wrongdoing. Instead, we need to rely on data and data analytics fand being smart about what data we choose to collect, how to combine with other data, what the data tells us and what to do with it), as well as monitoring and testing to look for potential issues, on site visits to different locations, and building trust so that employees feel safe raising concerns or wrongdoing.

So what can organizations do? They can develop data analytics programs (and there are some really cool platforms out there to support your program), have people who can run a data analytics program interpret the data (including knowing what data is irrelevant, able to identify possible trends or potential issues, and seeing and resolving issues upstream) and make it safe for people to speak up (and preferably find ways to reward them for doing so). All of these things can help detect possible disturbances in the organization.

Star Wars might be made up, but building a data driven program is very much a possible reality. When organizations see the benefit and make the right investments.

Read this article on the website.

Top 4 secrets of a successful ethics and compliance program

by Jim Brennan

Jim Brennan has been in the ethics & compliance space for 25 years and for the last 15 years has led the program of a global company with over 33,000 employees.

1. The Single Most Important Component of an Ethical Culture
2. It Isn’t Enough to Listen. People Must Perceive That They Are Heard.
3. Run Out Every Grounder.?
4. Ethics Officers are from Mars, Boards Are from Venus.

1. The Single Most Important Component of Building and Maintaining an Ethical Culture

What is the single most important component of having and maintaining an ethical culture? Is it:

a.)?Policies and procedures, including the Code of Conduct;

b.)?Training;

c.) Incentives;

d.)?Monitoring and auditing;

e.)?Risk assessments; or,

f.)?Other.

Each of ‘a’ through ‘e’ is a necessary and important part of an effective ethics and compliance program, as are all the elements of the Sentencing Guidelines. But the answer to the above question is ‘Other.’ The single most important component in building and maintaining an ethical culture -- by far -- is a?culture of open communications.

With apologies to St. Paul, if a company has a Code of Conduct so well-written that Shakespeare himself would be jealous; if it has the slickest online training ever; if it has a risk assessment process that is Nobel Prize-worthy; if it has all of this and more but does not have a culture of open communication, then all it has are noisy gongs and clanging cymbals. To change the metaphor, the ethics program at such a company would be all hat and no cattle.

Most corporate scandals are preceded by a chilling of communication. Once upon a time the water of open communications flowed smoothly, but more and more there appear stagnant eddies of stifled communication: “Let’s keep this one between us”; “Corporate doesn’t need to know”; “Don’t tell the Legal Department; they’ll just say no.” Here’s a pro tip for corporate leaders regardless of function: if you ever hear comments such as the above, then ‘ding ding ding’: alarm bells should be blaring in your head, warning you that the company is heading down the wrong track.

In?Outliers,?Malcolm Gladwell reviewed data from numerous airline accidents. “The kinds of errors that cause plane crashes," he wrote, "are invariably errors of teamwork and communication.” “One pilot knows something important and somehow doesn’t tell the other pilot.” Pilots need to “communicate not just in the sense of issuing commands but also in the sense of…sharing information in the clearest and most transparent manner possible.” Same thing applies to the corporate world. The kinds of errors that cause ethical crashes are almost invariably rooted in errors of teamwork and communications. Where communications are good, good things (like a strong ethical culture) happen. When communications are bad, bad things happen. Still doubt that?

Continue reading this article on the website.

Risk assessment for small companies

by Jeff Kaplan

Designing and implementing a compliance and ethics (C&E) risk assessment can be a daunting task.?This is true for many types of organizations, but it can be especially difficult for small businesses. Small companies often lack, among things, the resources, culture, enforcement-related incentives and relevant experience necessary to be successful in a risk assessment. For these and other reasons, it can be important for small companies to have an easy-to-use and effective risk assessment procedure.

Getting started

For many companies new to the C&E area the first step in designing/implementing a risk assessment (or, for that matter, taking many other C&E measures) should be assigning management responsibility for the process.?In theory this should be straightforward, but that may not always be the case with small organizations.

That is, a small company without an in-house lawyer may need to appoint an executive with operations, HR, finance or other duties to be what is in effect a part-time C&E officer role for the risk assessment.?However, that role is not a “machine that will run by itself.”?

Therefore, extra care should be taken to document and reinforce the risk assessment responsibilities of the manager(s) responsible for the process, e.g., inclusion of compliance duties in job descriptions, strategic plans and other responsibility-defining company documents.?

Outside counsel

Note that some companies hire outside counsel to assist with this effort.?While often valuable, having outside counsel is not strictly necessary for every small company’s risk assessment process.?For very small companies it might make sense to work through a business association, such as a trade association or chamber of commerce to hear from a compliance professional with experience in this area.??

One benefit of having a lawyer is that the process of conducting interviews can be done under attorney-client privilege. That, in turn, should make it easier for interviewees to be candid.

Continue reading this article on the website.

I hope you found today's journal valuable and, if you would like more analysis and insight please bookmark?our website .