Managing Compliance Risk in a Tight Economy
Ted Nunez, Ph.D., Director of Ethics and Corporate Responsibility
Joel Rogers, Vice President Ethics, Compliance & Content Strategy at Kaplan EduNeering
he costs of failing to identify and A particularly instructive example is the the board. Compliance programs have not
mitigate legal and other risks can ongoing crackdown on corrupt corporate been spared (though decreases in compli-
be high, yet nowadays professionals practices. U.S.-based companies operating ance budgets have not been as steep as
responsible for compliance often are con- overseas faced increased federal enforce- many anticipated, and some companies
strained by limited budgets in a tight econ- ment of the Foreign Corrupt Practices have allocated more money to this area).
omy. In a complex and increasingly more Act (FCPA) under the Bush administra- The combination of tighter legal require-
stringent regulatory environment, there’s tion, and there’s every indication that the ments and tighter budgets has forced
often too much risk exposure and too few Obama team led by Eric Holder at the DoJ compliance officers to rethink processes
resources to close the gap. The challenges and Mary Schapiro at the SEC are pursu- of risk assessment and mitigation with an
are compounded for large organizations ing FCPA investigations with even greater eye toward becoming both more effective
and global companies with multiple sites vigor. Both the number of active cases and and efficient in program design and re-
of operation and diverse, transient work- settlements are at record highs, as are lev- source allocation.
forces. els of company fines and prosecutions of Compliance professionals typically are
What’s needed is a workable strategy individuals. The DoJ has made clear that tasked with managing delivery of train-
and affordable tools for managing compli- specific industries such as life sciences are ing and certifications—in one form or
ance risks across the enterprise. For many under close scrutiny, while the SEC has another—across the enterprise. For many
companies, the most cost-effective way to reorganized its enforcement group into companies, the process requires multi-
identify and mitigate a range of risks in- special units, one of which focuses on cor- language versions of compliance messaging
volves leveraging the right technology and porate fraud and corruption. and document delivery across the globe.
automating the process. Before turning For both companies and individuals, Program managers that depend on manual
to potential solutions, though, let’s take several legal developments in the United approaches to bread-and-butter compli-
a closer look at some of the major chal- States and the EU presage greater risks ance functions such as the annual code of
lenges facing compliance teams today. of prosecution and more serious penalties conduct certification or conflict of inter-
for non-compliance with anti-corruption est disclosure can quickly find themselves
The Regulatory Landscape rules are on the way. Currently there are overwhelmed.
Enforcement of both longstanding federal companion bills in Congress that would A growing number of compliance teams
statutes and new laws is ramping up in the provide whistleblower protection to em- now recognize that managing compliance