Don’t miss out on a massive opportunity to be in the front of risk before it happens. Now is the time to find a new approach to managing COI at your organization.
Sign up for the session led by Katie Smith, Assistant Vice President and Chief Ethics Officer at USAA, and Nick Hayes, GRC Analyst at Forrester Research. Together, along with Convercent’s Chief Product Officer Phillip Winterburn, the panelists will discuss:
- How COI is currently being managed
- What a well-designed COI program consists of, including insight into step-by-step process workflows
- Must-have functionality when searching for a COI solution
- What key metrics you need to help gauge and defend your COI program’s effectiveness
- Learn what USAA has done to be proactive with their COI program
Read more to learn why COI is front and center for us and so many of our customers this year — and why it should for you, too.
TOP RISK AREA
COI is a top area for compliance-related risk and is anticipated to be so for the next five years, according to PwC’s 2015 State of Compliance Survey. But yet, despite the regulatory emphasis and research-backed findings, the failure to manage COIs has been a recurring theme of crises and scandals for decades. As businesses globalize, workforce culture and demands ebb and flow in highly dynamic ways, and products try to meet changing market conditions, new conflicts are constantly born and bred. In turn, industries need to be rigid and disciplined when searching for new conflicts, and constantly work on strategies on how to address them all while keeping COI processes fluid and open to retrofitting existing conflicts.
…conflicts of interest can be thought of as the viruses that threaten the organization’s wellbeing. As in the microbial world, these viruses come in a vast array of constantly mutating formats, and if not eliminated or neutralized, even the simplest virus is a mortal thread to the body.”
– Carlo V. di Florio, Former Director, Office of Compliance Inspections and Examination, SEC in a speech given in 2012 at the National Society of Compliance Professionals
Regulatory bodies have been hammering down on organizations as of late, like this new rule in the financial services industry for example, to increase tracking and transparency on “perceived or inherent” conflicts of interest. This same sector has also been under intense scrutiny for COI-driven FCPA violations specifically related to hiring relatives of government officials—including BNY Mellon, J.P. Morgan Chase and a slew of others. COI’s broader impact, however, extends into any industry – as seen by the recent settlements of Qualcomm and Nordion.
This phenomenon is hardly new: COIs have led to catastrophic crises for decades. In the 1980s, it was Ivan Boskey and Dennis Levine for insider trading, along with Drexel Burnham Lambert’s bankruptcy due to illegal activity in the junk market rooting back to one employee. In the 1990s, it was the growth (and eventual burst) of the Dotcom Bubble. In the 2000s, it was the economic fall out resulting in the 2008 recession.
Yet, if organizations wait for definitive regulatory guidance before establishing what they need, the waiting game may create longer-term challenges. COIs impact every part of your organization, from operations to infrastructure. Left unmanaged they could negatively impact larger business strategies and processes, creating a new tornado to tame. The recent fervor of regulatory scrutiny has challenged organizations to find a comprehensive way to collect and manage COI information.
For example, The BBC took the initiative to tighten COI rules for their senior executives to protect the media company’s reputation and mitigate future damage. The crackdown comes after increased criticism and scrutiny of Alan Yentob’s, a BBC executive and presenter, role in the widely-known UK charity Kids Company. Yentob was the charity’s former creative director and chairman of board of trustees until the charity’s controversial collapse last year.
Those firms moving proactively and decisively will be in a stronger competitive position than those firms that take a wait-and-see approach.” -Hugo Moreno, Forbes
Most CCOs would agree: managing COI is a lot easier said than done. Relationships are not only highly complex and their nuances susceptible to subjectivity, but there’s an understandable perception that the sheer volume of COI disclosures from an entire employee population would be untenable to manage (along with placing the onus on compliance to do something with the information once it’s in their hands). However, with thoughtful structuring and strategic operationalization, COI management can ultimately provide you with valuable insight and actionable information on the health of your organizational structure, processes, controls and culture.
JUST THE FACTS
- Fifteen percent of observed misconduct can be related to COI, the 2013 National Business Ethics Survey found, while 45 percent of COI types go unreported.
- Thirty percent of employees in general management and admin functions engage in activities that pose a COI, according to the 2013 KPMG Integrity survey.
- Twenty-six percent of organization’s surveyed in the Deloitte and Compliance Week 2015 Compliance Trends survey are using desktop tools to support their conflicts of interest component of their compliance program while 16 percent don’t use any technology or tools at all.
GIVE COI THE ATTENTION IT DESERVES (HELP IT, HELP YOU)
For an industry that favors structure and rules, it’s surprising that COI has been swept under the rug for so long by industry and government. COI is arguably one of the hungriest areas in your compliance program for attention as it can bring invaluable information to how you manage your risk, reputation and a compliance-first culture.
An integrated COI model that runs in tandem with your business strategy enables you to pull on historical data to become more proactive, flexible and prepared for change. This way beats rushing around and making ineffective reactionary decisions, which lead to bigger headaches down the line and potentially catastrophic consequences of not fully understanding the risks associated with business decisions you make.
LEAD BY EXAMPLE: EFFECTIVELY MANAGE COI
CCOs tell us conflicts of interest are managed as a function of their compliance program, but often this information lives in many different systems from Excel spreadsheets to Google forms, and from surveys to a simple desktop folder labeled, “COI.” When the Board or other executives call on compliance to report on COIs, or the impact they may have on pending strategic decisions, CCOs and their teams have to spend a copious amount of time herding the information together. When it all lives in disparate systems, the “process” (or lack thereof) can be compared to herding hundreds of cats.
To better manage COI, the experts in this session will help you:
- Understand the urgency and push for COI management on the organization and regulatory level
- Find the budget for getting COI on par with current compliance demand
- Bring COI back to the business by establishing a formal process
- Design an effective COI management strategy
- Build the business case, value proposition and budget at your organization
The one-hour session will lead to years of compliance improvement. You’re only a few clicks away from taking the first step toward more effectively managing COI in your organization. Stop risk before it starts.