In the frenzy of upsizing, downsizing and rightsizing compliance programs after downturns in the market or in the midst or aftermath of a major investigation, it’s important to keep in mind that experienced lawyers and compliance professionals bring significant value to a company.
It is value that’s hard to measure using conventional metrics:
- How do you measure the cost for an investigation or issue avoided?
- How do you measure the cost of over-doing due diligence or mitigation measures where the risk does not justify it?
- How do you measure the ability to identify an obscure but major risk issue?
- How do you measure training that is effective in preventing and detecting corruption or fraud?
- How do you measure the ability to interact with and persuade senior leaders in the company?
Well-Calibrated Judgment. Experienced professionals have developed well-calibrated judgment because they have seen and learned from experiences in the past. They’ve participated in transactions and investigations, seeing when things have gone wrong and when they’ve gone right and appreciating how new and more effective ideas might be incorporated into risk mitigation.
Well-calibrated judgment also comes from understanding the laws and, importantly, how regulators enforce the laws so that trends can be anticipated and companies can stay a step ahead if there are focus areas that need to be addressed.
Credibility with the Business. Experienced professionals recognize that the compliance organization has to be credible with the commercial organization and that understanding the risk appetite of the company is critical. They know that defaulting to a “no” answer is not the best approach, but that certain relationships and activities that get too close to the line should not go forward. They understand that dogmatic adherence to policies and rules that don’t make sense in the first place hurt the over-arching goals of the compliance program.
Experienced professionals have developed skills and confidence not only to work collaboratively with other functions (such as HR, legal and audit), but also to interact with and, when circumstances call for it, challenge business leaders.
Both a Short-Term and Long-Term View of Risk. Experienced professionals understand that companies face more than legal risk, but longer-term commercial and reputational risks as well. If those risks aren’t addressed, they can undermine the long-term viability of the company. They approach their roles not with an aim to preserve their own jobs, but rather to preserve the company’s future in the face of these risks. They understand as well that the company is not in business only to “do” compliance but at the same time compliance can play a key role in fostering commercial success.
Impact on the Compliance Program. Experience also pays off in building an effective compliance program. Experienced professionals understand the business reality that employees won’t read a 10 page compliance policy and that they don’t need to know the jurisdictional limitations of the U.S. FCPA or how the FCPA compares to the UK Bribery Act or other anti-corruption laws. They need to know the basics — the legal, commercial and reputational risks of non-compliance, what they can and cannot do, how to incorporate compliance and ethical considerations into decision making and when they need to raise issues with the
Compliance/Legal Functions. Experienced professionals know that training is the only control that mitigates certain risks, particularly when undertaking unusual transactions that are outside the scope of a pre-existing set of procedures. It is therefore best if it is dynamic, entertaining to catch employees’ attention, and concise. They understand that spending too much time on low risk issues (such as small gifts and minor hospitality to a counterparty) means that higher risk, more complex issues may not be adequately addressed.
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The bottom line is that engaging and retaining experienced professionals pays off. Why? They know how to ask the right questions, put the puzzle pieces together, distinguish and prioritise the highest risk issues and effectively communicate appropriate messages to all levels of the business organization. They also understand how to mitigate damages when issues do materialize and play an important role in developing and maintaining ethical culture.
While quantifying this value is difficult, companies should ask themselves: “What cost will the business incur for a mistake that could have been avoided?” Or, perhaps the better question is: “Do we really want to find out?” After all, the costs are almost never limited to just dollars and cents, but rather erosion of public perception and trust.
One thing is sure — in seeking legal and compliance professionals to navigate the minefield of corporate compliance and ethics, experienced professionals are a sound investment.
Bethany Hipp, pictured above, is Counsel in Allen & Overy’s Global Investigations Group focusing on internal investigations as well as anti-corruption and trade compliance. She’s based in Singapore. She previously worked for a multinational mining company and the U.S. Department of Justice. She can be reached here.
The views expressed in this post are the author’s own and do not necessarily represent the views of her employer.
This is by far the best description of the role of compliance officer I have ever seen
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