By Russ Warner, VP Marketing −
In a recent article, Michael Volkov posits that a culture of compliance within a corporation must be established at top levels within the organization – specifically with the board of directors and the CEO. To achieve success, the highest echelons of management in a corporation must commit to promoting a culture of compliance and good ethics. Without a committed board and CEO, the organization will suffer as a result of increased operational risks.
Companies face four common issues they must resolve to create a culture of compliance:
1) Lack of education and training for the board − Instead of discussing ethics or compliance issues in detail with the board of directors, CEOs often rely on the board members to deal with these issues themselves.
2) Audit committee obsession with financials – Often auditors are narrowly focused on financials and not on overall issues of ethics, compliance, and the importance of these to the success of a company.
3) The need for candid and in-depth reports – The Chief Compliance Officer (CCO) may feel compelled to give only good news to the board, sacrificing complete honesty for fear that negative information about compliance issues will reflect poorly on them and put their own job in jeopardy. Fostering an honest reporting system and open dialogue between the CCO and the board of directors is key. It’s crucial for a CCO to give a fair and honest report prior to board meetings to ensure the board’s support and understanding on important issues.
4) Undeveloped personal alliances between the CCO and members of the board – The CCO needs to reach out to individual board members and develop rapport to facilitate better communication outside a formal setting and foster beneficial relationships. CCOs may accomplish this with personal phone calls to board members or one-on-one lunch outings.
When dealing with issues of ethics and inquiries, it’s difficult to know how best to proceed with individuals of questionable integrity.
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