Dear Boards of Directors: Does your ability to conduct effective compliance oversight in 2014 keep you up at night?
Let’s stipulate the obvious: the ever-increasing legal and ethical complexities of the corporate landscape, too much on the board’s plate and too little agenda time. At the same time, each day brings heightened expectations for board oversight from regulators, investors and other stakeholders, as contemplated under the Federal Sentencing Guidelines and the recent joint Foreign Corrupt Practices Act guidance [PDF] from the U.S Department of Justice and Securities and Exchange Commission. With all this in mind, here are five bite-sized and easily achievable resolutions for the New Year that can significantly sharpen a board’s oversight of its company’s compliance risks and ethical culture:
1. Get Some “Not Your Father’s Board Training”
Step 1 in improving board oversight of compliance is (surprise!) better, more relevant and targeted board training. Period. If past board training has been provided at the 10,000-foot-helicopter level, maybe it’s time to bring the focus back down to Earth and into the modern compliance era. Has the board engaged in scenario discussions to “fire drill” what compliance oversight really looks and feels like? Received a briefing on the best practices of compliance programs of its peers? Been schooled on the right kinds of questions to ask the CCO during executive sessions? Understand how compliance risk assessment should be managed? Taken a deep dive into some of the key compliance risk areas of the organization?
For up-to-date “Not Your Father’s Board Training,” boards should consider enlisting an experienced expert who has actually been a sitting CCO and understands from first-hand experience what boards really need to know to exercise effective oversight of the company’s compliance program. It’s a small investment that could pay off big one day.
2. Commission an External Assessment of the Compliance Program
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