Welcome back to another episode of Adventures in Compliance. This week, we are considering stories from The Casebook of Sherlock Holmes, mining each story for themes and lessons related to the compliance professional, leadership and business ethics. Today, we consider  The Lion’s Mane. This is one of two stories narrated by Holmes himself and not reported by Dr. Watson. The final problem solved informs today’s discussion that it is risk-based monitoring which allows a person (or company) to operate safely so that no injury occurs.

Holmes is enjoying his retirement in Sussex when one day at the beach, he meets his friend Stackhurst, the headmaster of a nearby preparatory school called The Gables. Almost immediately the science teacher, Fitzroy McPherson, staggers up to them, clearly in agony and wearing only overcoat and trousers. He collapses, manages to say something about a “lion’s mane” and then drops dead. He is observed to have red welts all over his back, possibly administered by a flexible weapon of some kind, for the marks curve over his shoulder and round his ribs.

Moments later, Ian Murdoch, The Gables science teacher, appears. Murdoch is an enigmatic fellow with an occasional bad temper who once threw McPherson’s dog through a plate-glass window. Although Murdoch is suspected, he has an alibi. Subsequently, Murdoch is also seen with the same welts on his back and in dire health. It turns out he had been swimming in the same pond where both McPherson and his dog had been seen. Holmes returns to the pond and finds the deadly Cyanea Capillata or Lion’s Mane jellyfish whose tentacles wrap around their victim and administer toxic poisons.

Yesterday, I considered The Creeping Man as an introduction to risk management and compliance at the very top of an organization. Today I want to discuss risk-based monitoring.

Compliance Takeaways

  1. What is Risk-based monitoring?It is really about continuous, ongoing monitoring for those things which provide the most potential future risk to you. By using risk-based monitoring to review issues on an ongoing basis, and the models that are behind the risk-based modeling, risk-based monitoring models, they’re continuously refined based on incoming data.
  2. Siloed Data.The problem for many companies is they are siloed in not only their data but also in the systems. Because of the disparity of data systems, many companies are not tracking rigorous, quantified information all the time. As data comes in you begin to note certain patterns, which might actually point towards a variety of red flags for more thorough investigation.
  3. See issues in real-time?Having access to information around sales, the sales process and corporate largess in areas from corporate social responsibility work, to gifts, travel and entertainment, to conferences for customers and end users. With such risked-based monitoring a compliance professional has the opportunity see trends developing which could allow an intervention for a prescriptive solution which could prevent an issue from becoming a Foreign Corrupt Practices Act (FCPA) violation.
  4. Greater Profitability.Finally, the beauty of all these techniques is that they are tools that can make companies more efficient and, at the end of the day, more profitable. They also move compliance into the fabric and DNA of an organization or to use another well-worn phrase, operationalize compliance. The Department of Justice has made clear what it expects around the risk management process. You need to develop your response now.

Join us tomorrow as we mine the story of The Veiled Lodger for its compliance lessons.