COMPLIANCE 2.0; FACT OR FICTION?

Transcription

1 COMPLIANCE 2.0; FACT OR FICTION? Martin Tolar Aust & NZ General Manager

2 GLOBAL CAPABILITIES Research centres Office

3 History of the Firm Throughout the history of the Firm, The Red Flag Group has sought to support all industries by developing a variety of educational, screening and technology solutions. The Firm has added value and assisted companies of all sizes by: assists companies in developing and empowering companies to make smarter due diligence decisions devising custom reports on integrity risks with sales and channel partners, suppliers and customers providing a more sophisticated means of assessing country risk and securing the best ROI with the compliance budget developing technology to stop misconduct before it starts creating customized and adaptive activity-based training.

4 Overview of The Red Flag Group The Red Flag Group is a global compliance risk management firm. The Red Flag Group applies its unique set of advice, technology and business intelligence applications to manage the integrity and compliance risks of its clients. THE FIRM assists companies in developing and maintaining efficient and effective corporate governance and compliance programs has a proven track record in providing integrity due diligence investigations in 194 countries. has completed over 2 million due diligence reports for thousands of companies in the past 10 years Has worked with many Fortune 500 companies from around the world.

5 Overview of The Red Flag Group The Firm helps our clients to turn compliance into a competitive advantage through: Due diligence and screening Technology to support compliance Training Managed services Custom advisory projects Our solutions can be tailored to help companies with a variety of risks spanning across 23 unique areas.

6 Overview of The Red Flag Group Customer focus and integrity is at the core of our organization and an essential part of our relationship with our clients and the solutions we provide them. Our aim is to help clients increase sales, reduce costs and give them solutions that they need to manage their risks. We have one single focus: To help companies grow their businesses by avoiding compliance issues and to allow them to focus on progress. We have a significant amount of business intelligence, advice and technology solutions to help clients manage their distributors, resellers, suppliers, customers and people. Our business success is dependent on relationships, which are built on this foundation of integrity.

7 Our Vision We achieve our vision by using the four P s of the Firm: Products People Partners Productivity

8 Our Vision Products We have products that allow the compliance function to operate more effectively and efficiently; including: ComplianceDesktop IntegraCheck IntegraWatch IntegraAnalytics ComplianceInteractive IntegraTeach Supplier Integrity The Supplier Ecosystem Initiative. Each of these products is suited to meet a different need of our clients ranging from due diligence automation, screening and online training.

9 Our Vision People We are a great place to work and provide world-class experiences and opportunities for those who wish to take them. The firm currently has over 400 compliance professionals across 12 global centers that are devoted to our vision of providing value to our clients in each recommendation we provide. We are a truly global firm where it is common place to find our associates speaking multiple languages. The diversity of our employees is one of our greatest assets as it makes it possible for us to examine an issue from a variety of viewpoints.

10 Our Vision Partners We have a set of clients and suppliers who want to work with us and encourage others to become involved with the Firm s vision. We only partner with suppliers and other third parties that share our high standards. Likewise, our clients have come to expect sage and trusted advice from our Firm and we deliver on those expectations and meet our obligations.

11 Our Vision Productivity We are highly effective, lean and fast-moving. We are a Firm with a clear vision and a focus on our core competencies. We have continually refined our processes to create value for our clients in a timely and accurate fashion.

12 Your Facilitator

13 Agenda ISO An Overview What are the challenges of building a strong compliance culture? How has the role of compliance profession evolved? What is Compliance 2.0? How can compliance better engage with the business? Latest ISO developments.

14 Discussion Point The compliance function must identify and assess the compliance risk associated with a financial institution s activities. This requires the compliance function to have adequate knowledge and exposure to key business processes of the financial institution and keep up with material changes in the financial institution s business. S 8.4 of the Compliance Policy issued by Bank Negara Malaysia on October 2 nd Compliance function is the person(s) responsible for compliance management S 3.6 ISO 19600:2014

15 ISO An Overview

16 Where did ISO come from? ISO An Overview How was it produced? What does it mean?

17 ISO An Overview Part B Section 6 Commitment Part B Sections 7 & 8 Monitoring & Measurement Part B Section 9 Implementation Continual Improvement

18 ISO Some key points Scope of 19600

19 ISO Some key points

20 ISO Some key points Identification, analysis and evaluation of compliance risks

21 ISO Some key points Leadership: The governing body and top management should demonstrate leadership and commitment to the compliance management system by: Establishing and upholding organizational values Ensure the CMS is consistent with the organizational strategy Adequate resources are allocated, available and assigned Value of the CMS is clearly and regularly communicated to all stakeholders Establishing accountability mechanisms that apply equally to all staff

22 ISO Some key points Assigning responsibility across the organisation Governing Body Compliance Function Management Responsibilities

23 ISO Some key points

24 Behaviour & compliance culture ISO Some key points Behaviours that create and support compliance should be encouraged and behaviours that compromise compliance should not be tolerated The development of a compliance culture requires the active, visible, consistent & sustained commitment of all employees.

25 ISO An Overview

26 ISO An Overview

27 What are the challenges of building a strong compliance culture?

28 What are the challenges of building a strong compliance culture? Where have we come from? The Wolf of Wall Street

29 What are the challenges of building a strong compliance culture? Seven signs of ethical collapse : Pressure to maintain business numbers A culture of fear and silence A bigger than life CEO and staff who won t go against him/her A weak Board of directors A practice of conflicts of interest A belief that the organisation is above the law

30 What are the challenges of building a strong compliance culture? Well Fargo Video

31 What are the challenges of building a strong compliance culture? Tone at the top must be seen to be believed Wells Fargo Video 2

32 What are the challenges of building a strong compliance culture? Seven signs of ethical collapse : Pressure to maintain business numbers A culture of fear and silence A bigger than life CEO and staff who won t go against him/her A weak Board of directors A practice of conflicts of interest A belief that the organisation is above the law

33 What are the challenges of building a strong compliance culture? How do organizational leaders actively demonstrate commitment to compliance? Active and visible commitment and engagement by Board and senior management. Alignment of organisation s strategy with the compliance program and requirements Compliance aligned and integrated into day to day operational arrangements. Sufficient human and operational compliance resources. Role clarity and accountability clear roles and responsibilities for all staff at all levels. Compensation schemes reflect organizational values

34 What are the challenges of building a strong compliance culture? DISCUSSION POINT? How do we know when we have a strong culture of compliance within our organisation? Enron Video

35 What are the challenges of building a strong compliance culture? Seven signs of ethical collapse : Pressure to maintain business numbers A culture of fear and silence A bigger than life CEO and staff who won t go against him/her A weak Board of directors A practice of conflicts of interest A belief that the organisation is above the law

36 What are the challenges of building a strong compliance culture? Regulatory Guidance on culture has been provided by: Australian Securities & Investment Commission Australian Prudential Regulatory Authority

37 How has the compliance profession evolved?

38 Compliance 1.0 V Compliance 2.0

39 What is compliance? Compliance 1.0 v Compliance 2.0 USA Black letter law emphasis upon legal definitions and interpretations Australia The focus is upon processes, procedures, culture and behaviors. Asia Has taken a combination of both approaches. Until ISO no uniform definition or approach to compliance

40 Compliance 1.0 v Compliance 2.0 Compliance 1.0

41 Primary Objective Time Spent Position Compliance 1.0 Compliance 2.0 Key Success Factors Approach to Problem Solving Compliance 1.0 v Compliance 2.0 Understand, communicate requirements, monitor compliance Researching, understanding requirements, and educating others Detailed orientation and research Internal Belief Systems Oversee the compliance management system and assess potential risk vulnerabilities Working with various departments to understand their operational processes to ensure effective integration of new requirements Executive thinking and communication Encourage behavior

42 Management Compliance 1.0 Compliance 2.0 Primary value for your organization Compliance 1.0 v Compliance 2.0 Understand and communicate requirements Assist in decision making processes around investment of resources. Economic Responsibility Limited Compliance Manager now owns P&L responsibility for cost control Leadership Needed Limited Provides advice and Support to C-suite and demonstrates leadership across the organization Key Focus Administer and monitor compliance Building a more effective compliance culture

43 Mindset Compliance 1.0 Compliance 2.0 How you think about change When considering a new Product or service When reading new regulatory requirements When considering the implementation of a regulatory change Compliance 1.0 v Compliance 2.0 Has resisted change to avoid potential risk We can t do this because. What must we do This is what we have to do and by when Embraces change as an opportunity to improve the business Here are the challenges we ll need to work around What objectives must we meet and what are the business implications? We can integrate this into our existing operations most simply by doing..

44 How can compliance better engage with the business?

45 How can compliance better engage with the business? T Model of leadership

46 How can compliance better engage with the business? Know your personal brand What is your value proposition? Can you demonstrate where your role adds value? Can you help achieve business objectives more efficiently? Overall business strategy

47 Be across all aspects of the organization: Who are the major customers P&L position Current share price Overall business strategy Products and services offered Needs and influences of Customer decision making Staff How can compliance better engage with the business? Shareholders Regulators

48 How can compliance better engage with the business? Discussion Point Achieving shareholder value and regulatory obligations should not be mutually exclusive. How can compliance ensures the business works together and not against each other?

49 How can compliance better engage with the business? Main considerations in building compliance value: Building a stakeholder engagement model Listen, engage, document, repeat Become an internal consultant Focus should be on: Frameworks, flexibility, facetime Its important to remember: Values & standards are often driven by the organization in emerging markets and not regulation

50 How can compliance better engage with the business? To develop a culture of compliance the wider organizational community and stakeholders need to assume compliance responsibilities. Compliance leaders need to be Crisis Leaders: Advise on serious breaches or violations Pre-empt regulatory updates and changes

51 How can compliance better engage with the business? Present compliance as a profession Establish a professional body Set education requirements Create CPD Develop networking groups and knowledge sharing Learn from other compliance practitioners is different industry sectors Work in different sized organizations

52 Latest ISO Developments

53 Latest ISO Developments