It has certainly been a week for the ages in Houston, most of Texas and all along the Gulf Coast as Hurricane Harvey has wrecked a level of havoc not scene in that large a swath for many a moon, if ever. Ending this disastrous week, I first want to thank everyone who has contacted or in way connected with me to inquire how I and my family fared throughout the week. Multiple people, many who are only virtual acquaintances have reached out with offers of support and assistance. I will be eternally grateful to each and every one of you.
I used Hurricane Harvey and the attendant weather-related disasters as a starting point for blog posts this week. Today I want to end at a place that I began with on Monday, preparedness. But I want to expand beyond simply having a plan in place to discuss another aspect of preparedness; that is practice. For the compliance professional, one of the lessons from Hurricane Harvey is beyond simply being prepared but also to practice your preparations. While it may seem difficult to prepare for and practice these steps for a 1000-year flood; there some basics you can do like having emergency equipment and preparedness items ready, check they are working, line out your evacuation routes and other basic plans.
This same practice requirement holds true for the compliance professional. You must do more than prepare for a compliance emergency by preparing beforehand but you must also practice that preparedness. Secretary of Defense James Mattis made this clear in his Memo, entitled “Ethical Standards for All Hands”, which was released in August. One of the key lines was “To ensure each of us is ready to do what is right, without hesitation, when ethical dilemmas arise, we must train and prepare ourselves and our subordinates.”
In this sentence Mattis seemed to almost echo the Department of Justice’s (DOJ’s) Evaluation of Corporate Compliance Programs around training. In Prong 6 Training and Communication it asks the following question, Form/Content/Effectiveness of Training – Has the training been offered in the form and language appropriate for the intended audience? How has the company measured the effectiveness of the training? Here it seems Mattis is spot on that training must be real world based. In other words, you must practice the components of your compliance program so that when faced with the emergency or even the moment of truth, you will be ready to proceed with the right response.
As to practicing for an emergency, let me point to the Texas owned and based grocer H-E-B which unleashed their emergency response program for the first areas hit by Hurricane Harvey, Aransas Pass and Victoria. According to FreightWays.com, literally less than 24 hours after the eye of the hurricane passed these coastal towns, the company had fully mobilized its Disaster Relief Units (DRUs), “which are fully equipped with an H-E-B Pharmacies and mobile Business Services unit, which allows displaced residents to fill prescriptions, cash checks and pay bills, as well as provide access to an ATM. The H-E-B Mobile Kitchens, two 45‑foot‑long food preparation facilities that are each designed to serve up to 2,500 meals per hour, will set up and serve hot meals to first responders and storm victims. In addition, H-E-B dispatched a team of 100 employees to help assist in helping folks that have been impacted by the storm. H-E-B will be providing dry-ice, bottled water, dry-goods, and medicine.”
H-E-B could marshal and then muster this relief with such a quick turnaround because (1) they had a disaster relief plan in place and (2) they practiced executing it. Is it good business? You bet it is because the consuming public will remember who answered the call for help far before anyone else did or before even state or federal relief began to arrive in the ravaged portions of Texas. In words, it was a business response to an emergency where a business was able to deliver more direct and timely services.
The H-E-B example is but one of many such examples which are playing out in Houston and its surrounding environs now and will for the foreseeable future. Yet the compliance professional can learn from the H-E-B example. As set out by Secretary of Defense Mattis, practice your compliance program, your cultural values and ethics. Give your employees specific training on how to resist the call for a bribe. Provide them with the resources to call upon when they are faced with such an ethical and compliance dilemma. Make sure your organization’s hotline works literally from anywhere in the world by testing it periodically.
For your compliance organization practice taking an emergency call from oversees of major compliance violation. Go through your investigation and notification protocols. When was the last time you updated your contact list for the compliance department; both primary and secondary? How about the same question for senior management, the Compliance or Audit committee and full Board of Directors? How about your key third party sales agents and suppliers? Now do the same for your primary outside counsel investigative firm and make sure they are ready to respond.
This month I begin a new series in my monthly podcast series of one month to a more effective compliance program. In September, I am focusing on innovation in compliance. Sometimes innovation can be the simplest concept; such as practice. So, if you have not practiced using any of your emergency protocols for compliance in some time, I hope you will draw on the experiences of Secretary of Defense and HEB and practice emergency preparedness.
Finally, sit down and take some time to consider the compliance emergencies which could befall your company. Do not wait until your organization appears on the front page of the New York Times (NYT), Wall Street Journal (WSJ) or as in the case of Uber Technologies, you appear in a blog post and are caught unaware of your nefarious corporate actions.
As a final note, I wanted to give a huge shout out to all my Compliance Week colleagues who have supported me this week. I want to especially thank Compliance Week Editor Bill Coffin, who posted the following on his blog Coffin on Compliance and on the homepage of the Compliance Week website on Monday:
Hurricane Harvey Relief Fund
August 28, 2017
In support of our readers, subscribers, and friends affected by Hurricane Harvey in Texas, Compliance Week is making a donation to Global Giving’s Harvey Relief Fund. We encourage everyone in the compliance community to find a way to support Texas in its time of need. Let’s show the world how the compliance community does what it does best: helps others.
I ask that you consider any donation to the Harvey Relief Fund or any other charity of your choice to help those impacted by Harvey. My deepest and most heartfelt thanks to all.
This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at firstname.lastname@example.org.
© Thomas R. Fox, 2017