Eight steps to reducing compliance risks

Get one risk management tool provider's take on the top three corporate ethics and compliance issues facing major companies today.

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IT channel takeaway: Get one risk management tool provider's take on the top three corporate ethics and compliance issues facing major companies today -- and his eight basic activities for effective management and reduction of any given compliance-related risk.

With Richard Cellini, Esq., a VP with Integrity Interactive Corp. Integrity Interactive provides compliance risk management tools to more than 300 companies in the Fortune 2000, located in the United States and the European Union.

Question: In your opinion, what are the top three corporate ethics/compliance issues that companies deal with today?

Cellini: The top three corporate ethics and compliance issues facing major companies today are the following:

(1) Antitrust and unfair selling practices: Restricting, restraining or obstructing competition in the marketplace; conspiring with others to set prices or restrict available quantities; and engaging in deceptive advertising or other unfair selling practices. Anyone who attends trade conferences, interacts with competitors, manages resellers or conducts sales and marketing campaigns can find themselves on the wrong side of laws protecting fair competition. Sales personnel are especially vulnerable to these risks.

(2) Bribes, gifts and conflicts of interest: Using bribes, gifts or incentives to improperly influence business decisions of others; exercising judgment on behalf of others, despite having conflicting or competing interests or obligations; failing to disclose conflicts of interest. This risk is faced by anyone who offers sales and marketing incentives to customers, persuades government officials, makes employment offers, signs contracts with third-party vendors or generally makes binding decisions on behalf of the company.

(3) Financial integrity and fiduciary trust: Stealing, embezzling, misappropriating or abusing company property; engaging in or facilitating forbidden financial transactions; being insufficiently careful or loyal in carrying out company-related duties. This risk is faced by anyone who handles company funds, has access to company equipment and property, puts people on the company payroll or even requests reimbursement for travel and related expenses.

Question: What makes these your top three?

Cellini: Statistical analysis of Integrity Interactive's database of employee communications shows that these risks are three of the primary risks under active management by Integrity Interactive's customer base today (across a wide range of industries and geographical locations).

Question: Briefly, how should companies go about addressing these issues?

Cellini: There are eight basic activities available for the effective management and reduction of any given compliance-related risk:

Setting a pro-compliance "tone at the top;" adopting written ethics and compliance policies; providing employee communications and training; adopting internal compliance controls; monitoring employee conduct and auditing control effectiveness; providing employees with incentives for compliance and consequences for violations; evaluating and improving the effectiveness of compliance programs; conducting regular and visible board oversight of compliance programs.

Companies should deploy all of these against at least their top three (and probably their top 10) compliance risks.

This 3 Questions originally appeared in a weekly report from IT Business Channel.

This was first published in October 2006

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