Compliance and Ethics: Ideas & Answers. Edition 76

Dear friends,

Welcome back to another edition of Compliance and Ethics: Ideas & Answers.

In our first piece this week, I offer my thoughts and guidance for my fellow introverts preparing for the next C&E conference. Watch out for the upcoming short video about being an introvert at the compliance conference and how to make the most of what can be an overwhelming experience.

In our second piece this week, Jeff Kaplan outlines the four-dimensional framework for compliance and ethics (C&E) risk assessment/management that has evolved from the original three-dimensional framework he developed in the 1990's.

As always, we finish with a bit of fun in our regular feature Compliance Lite.

And don't forget there's more content on our website so please do visit us there to read our other articles.

You can now also sign up for this newsletter via email here.

Thank you, Joe.

Introverts at a C&E Conference: Making the most of it

by Joe Murphy, CCEP

At Compliance & Ethics: Ideas & Answers, Adam Balfour is our video master. He suggested we do a short video about being an introvert going to a C&E conference and how to make the most of what can be an overwhelming experience.? He, Mary Shirley and I did a brief video touching on the topic.

Of course, being an introvert, I over prepared for what was truly a short video.? So, I offer here additional thoughts and guidance for my fellow introverts as you prepare for the next compliance conference.

1. Being an introvert is not a diagnosis. This is not a form of antisocial personality disorder (APD). Rather, as well spelled out by Susan Cain in her excellent book, “Quiet: The Power of Introverts in a World that Can’t Stop Talking,” introverts are the thinking, quieter types who keep the extroverts from running the car off the cliff.? Extroverts push us to charge over the hill, but introverts check first to see if there is something there waiting to eat us.? So if you are going to a conference, be proud that you are thoughtful and quiet.? And do what works best for you. (And definitely read Susan Cain’s powerful book beforehand.)??
2. Talk with and listen to vendors. They are just as much participants in this field as you are, and they may have information that is useful to you.? During quiet times they are very happy to have someone to talk to. I have been on both sides of this and find it useful.
3. Plan to write LinkedIn posts from what you learn at the conference.? This gives you a specific mission, looking for useful nuggets you can share with others. ?
4. Learn public speaking, if you want to. Maybe you are considering speaking at a conference. The introvert’s way to do this is to study the subject of public speaking, maybe get coached by an expert.? It is like dancing – at first look it might not seem natural for an introvert, but you can learn and master it, in your own quiet, thoughtful way.?
5. Read about “active listening.” Try this with people at the conference. We did an article on active listening in Ideas & Answers.? Learn the questions for open-ended conversation starters: W.H.Y. –?? What, How and Why. In a one-on-one discussion with a new person you can ask these types of WHY questions:?? What is your role at your organization?? How did you get into this?? Why did you go into this?? These are all open-ended and invite the other person to open up. Active listening also means you avoid the enormous temptation to turn any discussion to yourself, and stick to questions about the other person. To test whether you understand, occasionally state back to the person what you think they just said.
6. Read things the speakers have written before this. Come prepared with questions from that prior research, and also with positive feedback for the speaker.? After speakers finish, tell them what you liked, mention their writing and what you found particularly insightful about it.? Even the most famous speakers like validation and feedback.?
7. In Mary’s book, she says to be your own kooky self. I have done this for years.? If someone knows my background in compliance they might find it a little academic and reserved.? But my kooky self is being a dancer.? This is a great activity for introverts because it is one-on-one with others, you can always talk about dancing, and there are set rules to follow. (And even extroverts are scared of dancing – it intimidates them.) But when I tell people I am a dancer it completely breaks the ice and makes conversations easy. Introverts have humor – we just won’t shout and slap your back.?
8. Give yourself permission to go back to your room and recharge. We introverts draw strength from being alone and there is nothing wrong with that.? Or find one person you connect with and sit quietly and talk.? There is no need to try to imitate extroverts. I have on my LinkedIn page a picture of Roy Snell and me talking, one on one, at a C&E? ? It is one of my favorite memories.

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The Four-Dimensional Compliance Risk Assessment

by Jeff Kaplan

In the 1990’s I developed a three-dimensional framework for compliance and ethics (C&E) risk assessment/management. ?Since then the framework has evolved and my current way of addressing risk centers largely on identifying and analyzing intersections of the following four areas:

*) Substantive risk areas.

*) Geographical factors.

*) Different “parts” of a company.

*) Mitigation.

An example of this approach is to consider the risk of corruption (substantive risk area) in your organization’s Eastern European region (geographical factors) for your sales team (part of the company) in light of current training, due diligence, and other controls (mitigation). This type of analysis facilitates understanding of an organization’s legal risks in a way that is granular enough to allow for efficient identification of appropriate enhancements to compliance controls.

Substantive risk areas?

In analyzing antitrust risks at a company one should first identify the different types of antitrust legal standards that could reasonably be viewed as risk causing for the company. This should entail more than simply collecting criminal (and in some cases, civil) law statutes, as we have often seen companies do in risk assessments. ?Rather, one should also include, among other things, consideration of different types of horizonal restraints, including price fixing, bid rigging and division of territories. And one should also determine whether vertical restraints should be part of the inquiry. For companies with any degree of market power the laws relating to dominance need to be considered.? Especially important are emerging areas that may be a surprise to others in the company.? In antitrust for example there are newly emerging employment issues, such as non-poach agreements, wage fixing and non-competes.? These may catch HR people off-guard.

Similarly, for the corruption risk area, one should generally assess risks not only of FCPA violations but also domestic bribery, commercial bribery and possibly lobbying, among other areas.

Note that some risks at a company may have been covered in prior assessment processes – formal or informal.– and need not be repeated. ??Indeed, one important facet of a risk assessment in some instances can be to identify what is and is not “in scope.”

Finally, in my view, too few companies address ethics (as opposed to compliance) risk. Generally, this entails conduct that does not constitute a violation of law but, rather, issues of right and wrong that could create significant reputational harm and/or lead to legal liability. ?Conflicts of interest sometimes fit this bill and so might other risk areas. Note however, that while an area may start as “only” an ethical issue, when companies go too far governments can react quickly with laws and regulations hurting the company’s business.

Risk capacity and risk motivation

The consideration of risk areas should often be based partly on key facts concerning relevant markets/business. ?For instance, with antitrust, one might enquire what market power the company actually has.? While conduct like price fixing and market allocation are violations even when the parties lack any market power, if the company perceives that it can control markets this could increase the risk of anticompetitive conduct happening. This and similar lines of inquiry can be viewed as the capacity to engage in risky conduct.?

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“Having the chance to talk with compliance and ethics professionals is one of my favorite things. You in this audience have experienced how difficult your jobs are. You know how you can be beaten down, harried, and subjected to constant pressure. You know what it is like to be repeatedly resisted and distressed. In fact, this job is so difficult and you get pushed down so hard that I will share with you a personal secret about me. When I started in this field many years ago before all the pressure I was actually 6 foot 7 tall! (If you don’t know me, I am 5’4’’)"

- Joe Murphy, CCEP

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