In this episode, Jay and I return for a wide-ranging discussion on some of the top compliance and ethics related stories, including:

  1. We discuss our highlights from the recently concluded SCCE 2017 Compliance and Ethics Institute. See Tom’s blogs, here, here, here and here. Click here for a report from Matt Kelly.
  2. Mike Volkov explores ISO 37001 in a week-long series? See the full week’s series on his site, Corruption Crime & Compliance. Henry Cutter reports on the standard’s slow acceptance in the WSJ Risk and Compliance Report.
  3. What is the status of your Board’s training for compliance? Ben DiPietro reports in the WSJ Risk and Compliance Report.
  4. Italian prosecutor charges Shell and former execs with overseas bribery. Dick Cassin reports in the FCPA Blog.
  5. Revenue recognition rules change in December. Auditors are under orders to ‘show no mercy’ to companies which have not prepared for the changeover. Tammy Whitehouse reports in Compliance Week.
  6. Continued chaos in the Trump Administration. Matt Kelly is back with addition ethical considerations from HHS Secretary Tom Price in Radical Compliance.
  7. Astros come home down 3-2 to the NY Yankees. Will they overcome?
  8. Join Tom’s monthly podcast series on One Month to a More Effective Compliance Program. In October, I consider compliance with business ventures such as in the M&A context, joint ventures, distributors, channel ops partners, teaming agreements and all other manner of business venture. The third week I continue to take a deep dive into JVs under the FCPA. This month’s sponsor is the Volkov Law Group. It is available on the FCPA Compliance Report, iTunes, Libsyn, YouTube and JDSupra.
  9. The Everything Compliance gang recorded a podcast at the 2017 Compliance and Ethics Institute, with special guest Roy Snell sitting in for Mike Volkov. The podcast will go up Thursday October 26th.
  10. Tom premiers an exciting new service offering the Doing Compliance Master Class.
  11. AMI SVP Eric Feldman is speaking in Houston on November 2, at 1:30. If you are in Houston, please plan to join us. For more information see the GHBER website for details and registration.
  12. Jay previews the Rosen Weekend Report.

The 2017 SCCE Compliance and Ethics Institute (CEI) is now in the books. Once again, the organization had record setting attendance with over 1,800 attendees from some 41 different countries. During the event, I had the chance to do an Everything Compliance podcast where we were lucky enough to have SCCE President Roy Snell join our group of top compliance commentators. Today I want to write about their observations on some of the highlights of the 2017 CEI.

For Roy Snell, myself and everyone who attended the Awards Banquet, the highlight was the acceptance speeches by Bojan Bajić and Višnja Marilović. Their story of how, in the still war-torn country of Bosnia, they worked to literally create a speak up whistleblower culture, legislation to protect whistleblowers, then moved forward to create an entire anti-corruption legislation for the country was one of the most inspirational moments I have experienced in my compliance career. In his acceptance speech Bajić showed himself to be naturally gregarious and hugely funny, even in his second language of English. The contrast with Marilović could not have been starker, as she recited all the trials and travails she went through as the whistleblower who helped bring down corruption. At the end of her acceptance speech there were SCCE members in the audience who were literally in tears from listening to her story. It was that powerful. Roy Snell has committed to finding a way to post the videos of their acceptance speeches to the SCCE website.

Jay Rosen thought the advanced discussions groups, of which he led a panel, were a highlight. He talked about the format which brings compliance professionals from many disparate industries and countries together to talk about best practices in a way that facilitates learning going forward. He contrasted the advanced discussion groups with more basic sessions for newbies or others who might have less experience in the compliance profession.

Rosen’s biggest insight was from the keynote speech by Marjorie Doyle. She told a great story on compliance and, apparently, he never realized that doing compliance is like taking care of cows on the ranch. Doyle even posted the ten lessons of compliance derived from ranching. Also, Doyle firmly believes in rewarding one’s self for a job well-done. She does so by purchasing jewelry for herself and while Rosen had thought it was all about shoes he indicated that he did note the overall pattern. He also found her keynote to have been “an incredibly passionate speech.”

Jonathan Armstrong brought an international perspective to his highlights. He noted that it is a huge advantage for a compliance practitioner from outside the US to be able to not only hear about cutting edge US best practices in compliance but also sitting down for in-depth dialogue with fellow compliance practitioners to foster more and greater learning. He also noted there was clearly a conscious effort to include the first-time participants or international attendees who might have felt uncomfortable in walking up to engage with another compliance practitioner. He provided an example from the Saturday volunteer event where first time attendees spent no longer than one minute alone as someone would come up to engage them. From an English perspective, he found the welcoming spirit quite a refreshing change and effective.

The thing that Armstrong identified as a key insight was what I might term the “360 degree” view of communications around compliance. It began with the insight that the language a compliance practitioner uses can often drive the perception of what compliance is in an organization. Put simply if the employees perceive you as the compliance police or Dr. No from the Land of No; they will treat you as such and not engage with you on anything close to a voluntary basis.

Matt Kelly has organized and participated in many conferences. He picked up on Armstrong’s theme that some of the best conversations he garnered the most learning through were informal discussions. He gave an example of a compliance practitioner he with whom he struck up a conversation during one of the break times in the vendor room. Kelly related that she is overhauling all the risk assessments her company does as they do a large number of them and they realized we were all asking the people the same things over and over. The company employees were becoming exasperated employees and she was looking at how to streamline it. He related this is a very typical problem for a lot of compliance officers and she could bounce some ideas off Kelly about how to simplify it. This was an example of what Kelly sees as one of the real strengths of the CEI, to bring compliance professionals together to share ideas in an informal setting. It drove home the power of the informal portion of the event and how it works with the formal agenda to facilitate growth for the compliance professional and the compliance profession.

Kelly bookended his thoughts with something that he gained more insight from in one of the formal sessions. It was around the issues of Artificial Intelligence (AI) and compliance. He noted that he has previously considered AI as simply “more of a tech thing”. However, in a session he garnered an appreciation of the US Sentencing Guidelines obligations that a compliance program is supposed to be designed so that people can be trained to learn from their mistakes and can improve the incentives for good conduct and provide punishment for bad conduct. If you simply have an algorithm which does not respond to either punishment or rewards you may need to rethink your approach.

For myself probably the biggest insight was from Donna Boehme, the Lion of Compliance. Even with her current travails Donna was present and participating in the conference. She told me she did so because she wants to support the next generation of up and coming compliance professionals. She views it as the responsibility of more senior compliance practitioners to participate and be present for the next generation who are learning the ropes. While I certainly know that lesson well, I found it good to be reminded of it by Donna.

I hope you will plan to join us at the SCCE 2018 CEI, which will be held once again at Caesar’s Palace in Las Vegas from October 14 to 19, 2018.

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 tfox@tfoxlaw.com.

© Thomas R. Fox, 2017

In this episode, Jay and I are joined by Louis Sapirman, CCO at Dun & Bradstreet for a look the the 2017 SCCE Compliance and Ethics Institute. We discuss the pro-conference events, what we hope to achieve at this year’s event and why it is important to give back to the compliance community. We end with a discussion on why the Harvey Weinstein affair may well change the face of compliance going forward.

Today we consider the 1940’s film, The Mummy’s Hand as the second installment in Universal Pictures series featuring this creature. Boris Karloff departed the role and it was taken over for one film by Tom Tyler, who was better known for his cowboy roles and his stint as Captain Marvel in the 1940 serial bearing the same name.

The film begins with the Egyptian, Andoheb traveling to the Hill of the Seven Jackals in answer to the royal summons of the High Priest of Karnak. The dying priest of the sect explains the story of The Mummy, named Kharis. The tale closely parallels that of the original film, except that Kharis steals the sacred tana leaves in the hope of restoring life to the dead Princess Ananka. His penalty upon being discovered is to be buried alive, without a tongue, and the tana leaves are buried with him.

The leaves are the secret to Kharis’ continued existence. During the cycle of the full moon, the fluid from the brew of three tana leaves is to be administered to the creature to keep him alive. Should despoilers enter the tomb of the Princess, a fluid of nine leaves will restore movement to the monster. Some down on their luck American archaeologists find a vase which they believe contains clues to the location of the Princess Ananka’s tomb. Of course, it does and after securing funding from a rich ex-pat they are off to the desert to find the tomb, along with the funder’s beautiful daughter.

In the final scene, The Mummy attempts to drink a brew of the tana leaves. He is prevented and the lead American explorer overturns a brazier onto the monster, engulfing it in flames. The ending has the members of the expedition heading happily back to the United States with the mummy of Ananka, and the spoils of her tomb. It all sets up the next sequel.

I thought about all of this when considering a recent visit I had with Gerry Czarnecki, founder of the National Leadership Institute. He is a well-known thought leader in leadership and corporate governance. He called himself a “corporate governance fanatic” which he went on to define as believing in the incredibly important role Boards of Directors in corporate governance, tempered with the fact that he believes a Board’s role is oversight not management of the organization. One of the things that intrigued me was that Czarnecki suggested a risk based approach to corporate governance at the Board level.

One consistent issue almost every Board of Director struggles with is how to engage in oversight without stepping over the line into management. Czarnecki believes this issue exists in most Boardrooms across the country. They are worried about how much they drill down “and management’s fret over their drilling down so far that they get into the operating management function.”

He said it all starts with the most powerful tool a Board of Director has in place – that of inquiry or as he termed it the “capacity for inquiry the capacity to ask questions.” He provided an example around the Board’s role in cybersecurity, noting when you look at cybersecurity and technology, Board members should know enough about the subject matter that they are focused on to ask questions that enlighten them. He said, “I walk into a boardroom for my first board meeting and I say I’d like to know a little bit more about what our cybersecurity plan is all about. Could you give me a quick update on what how do we protect what it is we want to protect? Someone will start going into the type of security software the company has in place. But the real questions is “what data we decide that we have to protect what are the pieces of data. What do we think we are our crown jewels? If we lose control over that data we are putting our business at risk or we’re putting our customers at risk?”

Czarnecki went on to note such an inquiry alone would be enough to generate a discussion with management about what were the company’s crown jewels. But the key, for a Board member, is to ask that question because the management team has not thought about it. This will stimulate an important discussion within the management team about what should they spend their money on, which is of course the type of business question that management should be asking and answering. He emphasized that it is not a question of technology, it is a business question.

If you think about this approach, it is a risk-based approach. Czarnecki is asking management to assess its risks of the crown jewels of data being breached. If so what would be the cost? From there, management should then determine the best risk management strategy to employ. This parallels the approach of the former Chief Technology Officer (CTO) of Coca-Cola who once told me that there was one thing that was the most important to the company which he had to protect at all costs. Both the good guys and the bad guys knew what it was, the formula to Coca-Cola.

This example also powers how a Chief Compliance Officer (CCO) should think about their approach to the Board. Former Department of Justice (DOJ) Compliance Counsel Hui Chen has said the Evaluation of Corporate Compliance Program (Evaluation) document is designed to get compliance professionals to think about their compliance program. I believe a CCO should try and get the Board to think about compliance by using a risk based strategy laid out by Czarnecki. What are your highest compliance risks? What would be the costs to your company if those risks were breached? From there you can begin to see how to budget for your highest risks.

So how about the American archaeologists in The Mummy’s Hand, did they use a risk based approach? I would suggest you check out the movie to find out.

 

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 tfox@tfoxlaw.com.

© Thomas R. Fox, 2017

In this episode I visit with data and IT security expert Brad Davis, CEO of EverSolve, a company specializing in data security. We discuss the role of the Board of Director’s in data and IT security in both oversight and going into the weeds. We consider how the corporate head of IT and security can educate their Board on their role in this burgeoning field. Finally, we consider how a Board should respond when the inevitable IT or security breach occurs.

Check out EverSolve by clicking here.

Brad Davis can be reached at bdavis@goeversolve.com.