Seth Berman, Stroz Friedberg’s executive managing director and UK head, on the value of compliance programmes
How can risk managers make boards understand the value of compliance programmes?
Highlighting the cost of failure is one option, but compliance, if done well, can actually be a boon to business. Take due diligence, for example, which is an important part of the compliance process. How well do you know the suppliers, agents and other organisations your company is dealing with and the individuals or businesses behind these? Knowing who you are working with, in various countries, is not only important because it reduces the risk of being subject to a bribery or corruption allegation, it can also reduce the risk of fraud or the likelihood of becoming involved in something that may cause embarrassment. Many risks can be mitigated by knowing more about a potential partner. In this way, a properly implemented and managed compliance programme not only reduces legal risk but also helps the company shine.
Do you think concerns about ethics and compliance being at odds with business interests are justified?
Although at times it would be more expedient to take a shortcut to get ahead, long-term goals are certainly not met by breaking the law. Businesses have no choice but to play by the rules and within the regulatory frameworks of their respective markets. In the long run, it is not just an issue of cost, but one of reputation. Good compliance will also help a company focus on its long-term goals, rather than short-term expediency.
Should companies provide incentives to encourage employees to comply with a programme?
Yes. Part of making a compliance programme operational is to embed compliance in employee’s thinking about their role. Senior managers play a key role in leading by example, which helps underpin the focus on ethics. However, nothing focuses the mind of employees more than their pay. Incentives that provide a tangible reward for compliance act as a strong statement about compliance value to a company.
Why did Stroz Friedberg develop a compliance app?
A growing number of companies are looking for ways to simplify compliance, educate employees and embed compliance in their operations. However, effective compliance policies are often unavoidably complex. This can be a roadblock to employees’ understanding of policies or ability to follow the rules. Navigator, the Stroz Friedberg compliance app, fills this gap by allowing the complexity of compliance to be placed in the background. It provides staff with clear and instantaneous direction on global compliance policies and can help support defensible decision making.
Seth Berman is executive managing director and UK head of Stroz Friedberg, a risk management, investigations and intelligence company
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