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In the recent virtual round table, The Compliance Officer’s Role in Times of Uncertainty, compliance experts provided insights that empowered participants to better navigate and manage the risks to safeguard an organization, its brand and human capital during challenging times.
John Arvanitis (Managing Director at Kroll, a division of Duff & Phelps), Fernanda Beraldi (Senior Director at Cummins), Patricia Marinho (Director of Compliance at Willis Watson Tower), and Jessica Legorreta (Compliance Officer at Christus Muguerza) leveraged their diverse industry experience to present a fascinating dialogue about risk management and organizational protection, specifically in the context of the current pandemic.
Arvanitis kicked off the discussion by framing out the vast range of global response to COVID-19, emphasizing that the burden of managing the associated risks will fall heavily on compliance professionals. The pre-pandemic era is shading into a post-pandemic “new normal” which will disrupt the relevant paradigms of many industries, not least the compliance industry. Arvanitis challenged the attendees to redouble their efforts to ensure the safety and continued functioning of their workforce, while championing the highest standards of ethics and integrity.
According to Beraldi, an organization’s compliance program is more of a marathon than a sprint: an effective compliance program must be painstakingly assembled by compliance officers, who must deliberate over and prepare for all manner of crises and challenges, including pandemics. Although “black swan” events are by definition infrequent, they become inevitable over long periods, so a well-conceived compliance program is built to withstand the future as well as the past.
Jessica Legorretta spoke about the importance of explicitly articulating organizational objectives—for example, her organization is a healthcare company, and so its explicit goal is to help people. Legorretta used this example to demonstrate how an effective compliance program centers the organizational objective, and that this focus helps the entire company commit to its integrity. She emphasized that keeping the program in optimal shape requires a constant and universal commitment from the organization and its workforce.
Patricia Marinho focused on communication. Noting that most businesses are operating in a virtual environment, she stressed that best practices around internal communication have changed, and that maintaining connections with employees and clients about standards and practices has never been more crucial to program integrity. Marinho went on to indicate that during the pandemic, her organization has set the tempo of providing information updates every three days. Finally, she noted that the pandemic has introduced opportunities for savvy compliance professionals to reevaluate the efficacy and value of a number of risk assessment measures, including electronic signatures, financial crime trainings and donations.
Fernanda Beraldi asserted that the concept of normal has, for the time being, been taken “off the table.” The times call for creative thinking and communication, coupled with a constant vigilance for novel opportunities. She ended by noting the importance of proactive communication to internal teams.
Jessica Legorretta agreed, adding some insights from the healthcare perspective. She identified agility and willingness to adapt as increasingly important qualities in the fluid conditions of the current crisis.
Patricia Marinho elaborated on the previous points, and explained that from the compliance officer’s standpoint, organizational health relies on a thoughtful assessment of where the company can be flexible and where it must stand firm.
Beraldi likened risk assessment programs to “living documents,” noting that the chaos attendant to the pandemic required a willingness to reconfigure programs to suit the requirements of the moment. Likewise, the ability to quickly implement changes in protocol throughout the organization is important, but she noted that this must never encroach on the organization’s integrity. Due diligence is a practice in which rigor and deliberation must balance against the need for speed and revenue growth.
Again, from a healthcare perspective, Legorretta noted the importance of carefully vetting third parties: this requires more information and in the current situation, sometimes means employing a different process than before the pandemic. This is difficult, Legorretta noted, and requires a thorough understanding of third parties’ due diligence processes. She used her own company as an example, explaining that her compliance programming had to upshift to compensate for increased donations, which had raised the risk of exposure to money laundering.
Beraldi was fairly optimistic about compliance teams but is concerned that, while everyone is working from home, there is an increase in the possibility of cybercrime– phishing, virtual payments, etc.—targeting the vulnerable components of the workforce.
Legorretta had a broader set of concerns—primarily, the increased risk of bribery associated with companies’ efforts to meet their annual numbers. As the world opens, governments will inevitably respond by beefing up regulations. The impacts of this response will vary by country and industry, and will require both timely information and pragmatic management.
She also warned of the problems associated with training and information fatigue, noting that this phenomenon tends to dilute interest in and adherence to compliance norms. The issues directly associated with the healthcare industry are profound and urgent, creating a clear incentive for employees to circumvent prescribed compliance standards. That said, due diligence has never been more vital, owing to the proliferation of new third-party relationships. In short, Legorretta noted, achieving company goals is critical, but keeping the focus on integrity and proper diligence is indispensable.
In closing, the entire panel agreed that securing a “seat at the table” for compliance—a difficult proposition in the best of times—is crucial to achieving organizational efficacy in times of crisis.
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