CFO Insights Compliance programs: What separates enough” from “good While there are a number of factors that separate the and, more recently, promulgations by the Organisation 1 from the the following five are key “good” “great,” for Economic Co-operation and Development (OECD) 2 differentiators in the highest-performing compliance have called for companies to develop effective programs: compliance risk mitigation programs and safeguards to protect against internal and external threats of Tone at the top. The starting point for any corruption and fraud. Yet, despite decades of experience ethics and compliance program is the board and in developing such practices, the results appear to senior management, and the sense of responsibility remain uneven at best, which is especially concerning at they share to protect shareholders’ reputational and a time when risks are increasing. financial assets. Together, the board and senior management should do more than pay lip service to Consider the stunning growth of social media, mobile ethics and compliance, however. The ethics and technologies, and big data, for example, which has compliance culture must permeate the entire ushered in a new era of transparency, exposing illegal organization, without exception, and should evidence transactions and raising profound new ethical questions itself through balanced metrics considered in the about the way business is conducted. Ethics and performance measurement of senior management. compliance executives may have come a long way in Moreover, the board and senior management should developing sophisticated measures to prevent, detect, empower and properly resource those individuals who and mitigate risk of malfeasance. But given that those have day-to-day responsibilities to mitigate risks and who wish to violate the rule of law are using more build organizational trust. Words without actions are sophisticated tactics, enough” in compliance is just “good an empty chalice. not good enough today. What separates a ethics and compliance program from a one, “good” “great” though? And how does an organization’s investment in compliance and reputational risk mitigation systems and processes measure up against leading practices? In this issue of CFO Insights, we’ll look at the building blocks of a world-class program that not only protects an organization from internal and external threats, but also enhances its brand and strengthens its relationships with multiple stakeholders. 1 Five key differentiators
CFO Insights Compliance programs: What separates “good enough” from 1 and, more recently, promulgations by the Organisation for Economic Co-operation and Development (OECD) 2 have called for companies to develop effective compliance risk mitigation programs and safeguards to protect against internal and external threats of corruption and fraud. Yet, despite decades of experience in developing such practices, the results appear to remain uneven at best, which is especially concerning at a time when risks are increasing. Consider the stunning growth of social media, mobile technologies, and big data, for example, which has ushered in a new era of transparency, exposing illegal transactions and raising profound new ethical questions about the way business is conducted. Ethics and compliance executives may have come a long way in developing sophisticated measures to prevent, detect, and mitigate risk of malfeasance. But given that those who wish to violate the rule of law are using more sophisticated tactics, “good enough” in compliance is just not good enough today. What separates a “good” ethics and compliance program from a “great” one, though? And how does an organization’s investment in compliance and reputational risk mitigation systems and processes measure up against leading practices? In this issue of CFO Insights, we’ll look at the building blocks of a world-class program that not only protects an organization from internal and external threats, but also enhances its brand and strengthens its relationships with multiple stakeholders. Five key differentiators While there are a number of factors that separate the “good” from the “great,” the following five are key differentiators in the highest-performing compliance programs: Tone at the top. The starting point for any ethics and compliance program is the board and senior management, and the sense of responsibility they share to protect shareholders’ reputational and financial assets. Together, the board and senior management should do more than pay lip service to ethics and compliance, however. The ethics and compliance culture must permeate the entire organization, without exception, and should evidence itself through balanced metrics considered in the performance measurement of senior management. Moreover, the board and senior management should empower and properly resource those individuals who have day-to-day responsibilities to mitigate risks and build organizational trust. Words without actions are an empty chalice. 1