Proposed changes to UK Corporate Governance Code - http://www.chaordicsolutions.co.uk/blog/from-our-grc-consultants/proposed-changes-to-uk-corporate-governance-code/

http://www.chaordicsolutions.co.uk/blog/from-our-grc-consultants/proposed-changes-to-uk-corporate-governance-code/

Proposed changes to UK Corporate Governance Code: risk management now one of the most important board responsibilities.

 

Extract from Financial Reporting Council (FRC) Press Release – 6 November 2013:

The Financial Reporting Council (FRC) has published for consultation changes to the UK Corporate Governance Code, guidance for boards of listed companies and standards for auditors covering risk management and reporting. Supplementary guidance for directors of all banks is also being issued.
 
The proposals build on the FRC’s work on “Boards and risk” and aim to raise the bar for risk management by boards and communication to the providers of risk capital about the risks faced by companies in which they invest and how they are managed or mitigated.
 
In response to concerns expressed on earlier proposals issued in January, these new proposals set out afresh how the FRC will  implement the recommendations of Lord Sharman’s 2012 Inquiry ‘Going Concern and Liquidity Risks: Lessons for companies and auditors’. The Inquiry looked at the corporate governance and reporting lessons to be learnt from the failure of ostensibly healthy businesses in the financial crisis.
 
The FRC has made a key change in these proposals by bringing together its previous guidance on risk management and internal control with the assessment of the going concern basis of accounting; so encouraging the integrated assessment and reporting recommended by Lord Sharman.
 
Melanie McLaren, Executive Director, Codes and Standards, said: 

“Risk management is one of the most important responsibilities of the board. Understanding the principal risks facing the company is essential for the development of strategic objectives, and the ability to seize new opportunities.  For investors, as providers of risk capital, knowing how the board is managing and mitigating risks is an important indicator when judging whether the company will be able to deliver the value that investors seek. The new guidance, and the proposed changes to the Code, highlight the issues that boards need to consider when assessing and managing risk, crucially including risks to solvency and liquidity. We have placed considerable emphasis on the need for robust assessment by boards and on the important role of auditors in ensuring reliable communication to investors.”

 Broader Risk Considerations and Role of the Auditor
 
The draft guidance sets out boards’ responsibilities for setting the company’s risk appetite, ensuring there is an appropriate risk culture throughout the organisation, and assessing and managing the principal risks facing the company, including risks to its solvency and liquidity. As now, boards should summarise the process applied in reviewing the effectiveness of the system of risk management and internal control.  There is a new encouragement to explain what actions have been or are being taken to remedy any significant failings or weaknesses identified from that review.
 
Under the proposals, auditors will be required, in meeting their current requirement to consider whether reporting is fair, balanced and understandable, to consider and report if they are aware of any material matter in connection with the disclosure of principal risks that should be disclosed.
 
Solvency and Liquidity Risks and Going Concern
 
In response to the recommendations made by Lord Sharman the FRC proposes a new Corporate Governance Code provision and related guidance. They establish the need for a robust assessment by companies of how they manage or mitigate their principal risks, including risks to solvency and liquidity, and to explain which if any of those risks have also given rise to material uncertainties for the purposes of reporting on the company’s going concern basis of accounting.  The FRC is, therefore, proposing to remove the current Code provision requiring listed companies to make a “going concern” statement. That statement is focussed on the narrow meaning of assessing the going concern basis of accounting, and so detracts from the broader integrated assessment and description of solvency and liquidity risks envisaged by Lord Sharman.
 
Banking considerations
 
The Sharman Inquiry also looked at whether a special disclosure regime is required for banks and concluded that this should not be necessary.  The Inquiry considered it important that the FRC should clarify that a conclusion that a bank is or would be reliant, in stressed circumstances, on access to liquidity support from central banks that is reasonably assured, does not necessarily mean that the bank is not a going concern or that material uncertainty disclosures or an auditor’s emphasis of matter paragraph are required.
 
The FRC issued guidance for banks along those lines in January which found general support. Accordingly, the FRC is also now consulting on supplementary guidance to directors of banks updated only in respect of the proposed integrated guidance and developments in the regulatory regime.
 
Feedback Statement and Other Companies
 
 A detailed feedback statement on the FRC’s January proposals is also being published today. Those proposals extended to unlisted entities other than banks and met with considerable adverse feedback. The FRC plans to consult in 2014 separately on draft guidance for directors of such companies and is currently considering the development of simpler and more proportionate guidance.
 
The consultation announced today closes on 24 January 2014.  The FRC expects to issue the final Code, guidance and standards in the middle of 2014 with application for financial years beginning on or after 1 October 2014.

More … http://frc.org.uk/Our-Work/Publications/FRC-Board/Consultation-Paper-Risk-Management,-Internal-Contr.aspx

NEWSFLASH: Our Senior Partner, Robert J Toogood, just been awarded MSc in Risk Management (Distinction) - http://www.chaordicsolutions.co.uk/blog/news/newsflash-our-senior-partner-robert-j-toogood-just-been-awarded-msc-in-risk-management-distinction/

http://www.chaordicsolutions.co.uk/blog/news/newsflash-our-senior-partner-robert-j-toogood-just-been-awarded-msc-in-risk-management-distinction/

NEWSFLASH: Our Senior Partner, Robert J Toogood, has just been awarded a MSc in Risk Management (Distinction), fantastic independent endorsement of his significant real-life experience/expertise gained over twenty-five years in the areas of governance, risk management and compliance … visit his companion site to see how he can help you overcome your current challenges.

More … www.robertjtoogood.com - currently optimised for normal laptop/desktop viewing, but will be made more mobile-friendly over the coming months.

 

Companies and regulators in emerging markets must improve corporate governance - http://www.chaordicsolutions.co.uk/blog/from-our-governance-consultants/companies-and-regulators-in-emerging-markets-must-improve-corporate-governance/

http://www.chaordicsolutions.co.uk/blog/from-our-governance-consultants/companies-and-regulators-in-emerging-markets-must-improve-corporate-governance/

Companies and regulators in emerging markets must improve corporate governance: collaboration key to success.

 

Extract from Global Corporate Governance Forum website:

Key Corporate Governance Issues in Emerging Markets: Theory and Practical Execution – June 11-12, 2012. Leipzig, Germany

The HHL Center for Corporate Governance, in collaboration with the Global Corporate Governance Forum, brought together senior representatives from academia, development institutions, companies and investors to provide a future-oriented assessment of the governance situations in three important regions of the world – Africa, Asia and Southern Europe.

While the conditions in the countries representing the three regions – Nigeria, Indonesia, and Croatia, respectively – are quite different, there were be many over-arching topics that are relevant to all regions.

Each regional session started with a presentation on the key issues and challenges for corporate governance reform in the selected country, followed by an assessment on how this experience reflects the regional trends and conditions. A panel discussion on how to advance corporate governance in the region concluded each session.

Important sessions of the conference focused on two key governance issues:

- The performance value of ‘good governance’ in emerging markets, based on the latest academic research and practical insights from large international investors.

- Corruption and practical ways of dealing with this major governance problem.

Full conference report (pdf)

For more detailed information, please visit the conference website. 

Background: 

The Handelshochschule Leipzig was founded 1898 and is Germany’s oldest university for business administration studies. In 2010, the Center for Corporate Governance was established at the HHL. Apart from research and educational projects, the Center promotes professional exchange between research and practice. Its research activities are focused on the relevance of good governance for performance, diversity and the development of governance in emerging countries.

 http://www.hhl.de/ccg

More … http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/global+corporate+governance+forum/events/hhl_conference

Increasing corporate governance opportunities in developing arab world - http://www.chaordicsolutions.co.uk/blog/from-our-governance-consultants/increasing-corporate-governance-opportunities-in-developing-arab-world/

http://www.chaordicsolutions.co.uk/blog/from-our-governance-consultants/increasing-corporate-governance-opportunities-in-developing-arab-world/

Increasing corporate governance opportunities in developing Arab world: contributing to better strategic decision making.

 

Extract from Insead Knowledge - Jane Williams:

As they shift towards more market-based economies, Arab companies can no longer afford to neglect demands for greater accountability and transparency in the boardroom.

© 2012 INSEAD Knowledge

More … http://knowledge.insead.edu/csr/corporate-governance/corporate-governance-in-a-developing-world-2481

Our recent research has identified key GRC implementation barriers - http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/our-recent-research-has-identified-key-grc-implementation-barriers/

http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/our-recent-research-has-identified-key-grc-implementation-barriers/

Our recent research has identified key GRC implementation barriers: also best practice guidance on how to address them.

 

From Robert J Toogood, Senior Partner – Chaordic Solutions:

We live in exciting but unchartered and dangerous times.

For these reasons, it is vitally important we learn how to more effectively manage the dynamic and complex interrelationships between the areas of governance, risk and compliance.

Unfortunately, the current global economic climate is partly due to a significant number of corporate failures which have challenged the foundations of the global economic system.  These failings could be argued as evidence of an ineffective approach to managing governance, risk management and compliance activities within the modern-day corporation.

An integrated approach to managing this complexity makes sound sense and in isolation, on paper, can be easily justified.  However, the barriers to effective implementation are many and need to be better understood.  The realities of the new world in which we all now live and work are such that we can no longer accommodate inefficiencies in our critical functions and processes.

So the time has come for us to look at our organisations and society in general in a different, much more holistic, and sustainable way.  An integrated approach to managing governance, risk management and compliance provides us with a way of achieving this … provided we learn from the past and provide the correct environment for our efforts to succeed.

Recent research conducted by Chaordic Solutions has identified some of the implementation barriers and offers best practice guidance on how to address them.  If you would like to discuss how the findings from this research might help you with some of your current challenges, then contact Robert J Toogood at on +44 (0)1983 617241 or at robert_toogood@chaordicsolutions.com to schedule some time … on a strictly confidential and non-obligation basis

More … www.robertjtoogood.com … this site is best viewed from a laptop or desktop as it is not currently optimised for mobile viewing.

Chaordic Solutions is a trading name of Project Systems Support © Copyright 2013. All Rights Reserved

Risk-awareness can be hindered by tension between business and risk officers - http://www.chaordicsolutions.co.uk/blog/from-our-risk-management-consultants/risk-awareness-can-be-hindered-by-tension-between-business-and-risk-officers/

http://www.chaordicsolutions.co.uk/blog/from-our-risk-management-consultants/risk-awareness-can-be-hindered-by-tension-between-business-and-risk-officers/

Risk-awareness can be hindered by tension between business and risk officers: but senior risk committees can help.

 

Extract from Economist Intelligence Unit Press Release:

A survey of institutional investors conducted by the Economist Intelligence Unit reveals a disconnect between business and risk functions at many institutions. Whereas a majority (52%) of non-risk staff thinks the risk function exists primarily to fulfill regulatory obligations, only 30% of risk professionals think this. Moreover, less than two-thirds of all respondents (61%) think that their organisations’ business managers have a clear understanding of the role of risk managers, and just 16% strongly agree that they do. Those in the risk function are less confident that this is the case—just 56% agree (and only 12% strongly agree).

These are among the key findings of a new report published today: Closing the communication gap: How institutional investors are building risk-aware cultures. The report, commissioned by State Street, is based on a survey of 297 institutional investors. It examines the quality of information that the business receives from the risk function, how effectively the risk function communicates with other areas of the business, whether the risk function is well understood, how well managers and staff are incentivised to achieve risk objectives, and how these characteristics compare globally.

Other findings of the research include:

Reputational risk ranks alongside market risk as a key concern. Institutional investors now rank risks to their reputation alongside risk arising from market volatility as their highest priority, with 56% of respondents identifying it among the top-three risks facing their organisations. This is ahead of investment risk (46%), regulatory risk (34%) and counterparty risk (24%). This finding reflects the response of investment organisations to the financial crisis and a series of scandals since that have blighted the public perception of the financial services sector.

Few think the quality of internal risk information – especially in Asia – is very good. Only 30% of survey respondents overall rate the information they receive from internal sources about risks that relate to their job as very good, a figure that falls to just 20% in Asia. A larger proportion of employees at institutions headquartered in North America, 36%, rate the quality of the risk information they receive as very good. This presumably reflects the increased demands of regulators and investors, as lessons are learned in the wake of the financial crisis—and also the level of investment in risk-management technology designed to enhance and integrate risk reporting.

Risk committees provide the bedrock for more cohesive risk frameworks. While correlation cannot prove causation, the survey suggests that the presence of a senior risk committee or a governance body that brings together senior risk, compliance and audit people is the foundation of better risk-awareness throughout the enterprise. Some 83% of respondents at firms with risk committees say managing risk is the highest priority for their organisation, compared with just 64% of those without a risk committee. Additionally, 87% of institutions with a senior risk committee rank internal information on major risks as good or very good, compared to just 63% of those without such a committee. Two-thirds of respondents at institutions with a senior risk committee think that business managers have a clear understanding of the role of risk managers, compared to 47% in those without such a committee. Finally, 68% of those with a risk committee agree that “the risk function helps produce better investment outcomes” compared to 51% of those without such a committee.

Regular dialogue between the front office and the risk function is associated with better investment outcomes. Those institutions that think their risk function produces better investment outcomes are also those where there is more likely to be regular dialogue between the risk function and the front office about the selection of assets and other investment matters (including counterparty risk). Some 84% of those that agree that the risk function helps produce better investment outcomes say such dialogue occurs regularly (and 35% strongly agree), while this is true of only 49% of those that do not think the risk function produces better investment outcomes (7% strongly agree).

Risk objectives are not always incentivised at senior levels. While at 88% of all investment organisations provide executive board members with some sort of risk target, at less than half (46%) are they financially rewarded for meeting them. Incentives for other functions vary, but in all cases targets are more likely to be applied than incentives. Investment professionals in North America are more likely to be incentivised than elsewhere, with 76% financially rewarded for meeting risk targets or objectives compared with 61% in Europe. Additionally, those institutions that associate risk with better investment outcomes are more likely to reward any function for meeting its risk objective or target.

The findings are based on a survey conducted in the first quarter of 2013 of 297 employees of investment institutions.

52% of respondents are either executive board members or C-level executives and 30% are vice-presidents, senior vice-presidents or department heads.

29% of respondents are portfolio managers, 21% are risk professionals, 18% are from operations and general management and 13% are from sales and product development.

48% of respondents are from asset managers, 35% are from asset owners (including insurers, pension funds and sovereign wealth funds) and 18% are from intermediaries.

39% of respondents come from investment institutions headquartered in the Asia-Pacific region, 33% are from Europe, 19% are from North America and 9% are from other regions.

© 2011 The Economist Intelligence Unit Limited. All rights reserved.

More … http://www.managementthinking.eiu.com/closing-communication-gap.html

 

 

Need new leadership models to help us recover from current economic gloom - http://www.chaordicsolutions.co.uk/blog/from-our-strategy-implementation-consultants/need-new-leadership-models-to-help-us-recover-from-current-economic-gloom/

http://www.chaordicsolutions.co.uk/blog/from-our-strategy-implementation-consultants/need-new-leadership-models-to-help-us-recover-from-current-economic-gloom/

Need new leadership models to help recover from current economic gloom: must look beyond Fortune 100 for inspiration.

 

Extract from London Business School Business Strategy Review – Professor Julian Birkinshaw:

Rethinking the responsibility of business leaders

What is the primary responsibility of business leaders today? Is it to make a financial return for their shareholders? Or is it to contribute more broadly to the welfare of employees and society as a whole?

This question has always been important, but it takes on greater significance as we seek to recover from the worst contraction since the Great Depression.  How business leaders respond, and how they prioritise different stakeholders, will have a major impact on the speed of recovery.

A poll conducted by London Business School, in the lead up to the Global Leadership Summit on 20 May, showed that business leaders are being expected to take on a broader set of responsibilities than ever before. Across 3,800 respondents, maximising total financial return to shareholders was rated 3.7 out of 5 in terms of importance, while creating a responsible culture, demonstrating integrity and moral leadership, contributing to the long-term sustainability of the global economy, and creating an engaging place of work for employees all scored between 3.4 and 3.6. The message seems clear: we want our leaders to do everything!

What is the way forward?  There is an increasing recognition that we need new models of leadership, where business leaders can balance the needs of multiple different stakeholders and are visibly accountable to the organisations they work for rather than the other way round.  But it is not obvious what these alternative models might look like.

My view is that we need to look beyond the usual best-practice corporate case-studies, to see if there are leadership and management principles we learn from other settings.

- If we want our business leaders to be properly accountable, we can gain insight from the principles of joint responsibility exhibited by many professional partnerships.

- If we want our business leaders to take a long-term view, we should seek to understand how many family-owned firms have sustained themselves over hundreds of years.

- And if we want our business leaders to balance multiple competing objectives, we can learn from the checks-and-balances built into democratic governments.

This is just a starting point. There are also, of course, many different models of corporate governance that avoid the short-termism and financial focus of the Anglo-American model, and there are insights to be drawn from the renewal and adaptability of cities, faith systems, and even life itself.  The challenge is to raise our horizons, and to look beyond the Fortune 100 for a glimpse of what the future of leadership might look like.

Author: Julian Birkinshaw is Professor of Strategy and Entrepreneurship at London Business School

Copyright 2013 London Business School

More … http://bsr.london.edu/lbs-article/754/index.html

Value of CCOs at board level - http://www.chaordicsolutions.co.uk/blog/from-our-compliance-consultants/value-of-ccos-at-board-level/

http://www.chaordicsolutions.co.uk/blog/from-our-compliance-consultants/value-of-ccos-at-board-level/

Value of CCOs at board level: to convince how governance, risk and compliance management can improve bottom line.

 

Extract from Corruption, Crime & Compliance Blog – Michael Volkov:

Chief Compliance Officers are basically optimists.  In the face of a mountain of worst case scenarios (typically referred to as “risks”), CCOs keep smiling and work incredibly hard.  They are “religious” zealots in business clothing.  CCOs indoctrinate their staff to fight the same cause and they spread the word on the importance of ethics and compliance.

The perception of CCOs is far different.  Management and employees often view CCOs and their staff as “law” enforcers or “sheriffs.”  If that is the perception, the CCOs have an important task – to change this perception and turn into important business partners.

CCOs are often challenged to make the business case for compliance.  It should be an easy argument – an integrated approach to risk and compliance directly translates into bottom-line increases in profits.  In this context, it is a mistake to argue that legal and regulatory requirements dictate that a compliance program follow certain policies and procedures, or else the company will suffer big fines and reputational damage.  A singular focus on negative consequences is a limited (albeit partially effective) message.

There are significant operational advantages to integrating governance, risk and compliance issue – namely that effective compliance is good for business.  What do I mean by this?  A CCO has unique visibility of an entire organization.  CCOs have to become familiar with all of the business operations.  They have a view of the company that few others in the C-Suite have.  And they can provide important insights into the governance, risk and compliance mix.

CCOs often report to the Board on common metrics of compliance program effectiveness – number of complaints, risk assessments, audit reviews and disciplinary actions taken.  There are other important operations that CCOs can identify, including a lack of oversight, organizational silos, wasted resources and information, lack of data integrity.  CCOs can then assist in identifying effective oversight programs, integrated risk and control policies, quality data and information, resource and personnel improvements, and streamlined business processes.

CCOs can bring about a good marriage of compliance and operational goals.  With a fundamental understanding of the business operations, CCOs can make valuable contributions to key business decisions relating to organizing people, process and technology, and projecting future benefits and costs from key business decisions.  CCOs can make the case that strong risk and compliance processes can increase revenues, reputation and brand protection, customer attraction and retention, improve workforce performance and asset protection.

To transform CCOs into effective business partners requires one significant change – CCOs have to be elevated to the C-Suite.  This is occurring more frequently but companies still have a long way to go.   Assuming they have a seat at the table, CCOs can advance the importance of the compliance function by communicating ways in which governance, risk and compliance management can improve the bottom line for everyone.

© 2011 – 2013 · Corruption, Crime & Compliance, All Rights Reserved.

More … http://corruptioncrimecompliance.com/2013/05/turning-ccos-into-business-partners/

Compliance and ethics is separate profession with distinct competencies and expertise - http://www.chaordicsolutions.co.uk/blog/from-our-compliance-consultants/compliance-and-ethics-is-separate-profession-with-distinct-competencies-and-expertise/

http://www.chaordicsolutions.co.uk/blog/from-our-compliance-consultants/compliance-and-ethics-is-separate-profession-with-distinct-competencies-and-expertise/

Compliance and ethics is separate profession with distinct competencies and expertise: needs autonomy from management.

 

Extract from Corporate Counsel, The Compliance Strategist –  Donna Boehme:

In January/February 2013, the Society of Corporate Compliance and Ethics (SCCE) polled 800 compliance and ethics professionals on the topic of whether the chief compliance officer should report to the general counsel, and 80 percent said: “No.” The same group overwhelmingly said that the GC should not attempt to also serve as the CCO—a whopping 88 percent.

Here is my shocked face :-0

No doubt some will dismiss these results as the C&E profession questing for power, a turf battle between GC and CCO—a kind of Hunger Games competition with each trying to convince top management and boards of their primacy. But such blithe cynicism would be overlooking the complexity of issues, common-sense reasoning, and wealth of settlement agreements, government guidance, regulatory action, and anecdotal data in support of separating the two roles.

I’ve also heard some complain that the momentum for CCO independence is being driven by non-lawyers. Nonsense. A large percentage of CCOs are lawyers (although the significant number of successful CCOs without legal backgrounds testifies to the fact that compliance is not a legal function). Also, as illustrated by the SCCE survey, CCOs regard their in-house legal colleagues as close and valued allies with whom they enjoy a positive working relationship.

But none of that changes the fact that compliance and ethics is an entirely separate profession that requires distinct competencies and expertise—and autonomy from management—to do its job well. As some of the survey comments specifically noted, it is pretty hard to make a case for that autonomy when the CCO reports to the GC, and essentially impossible where the CCO is the GC.

Having spent years on the ground in both camps (as both in-house counsel and chief compliance officer) and hearing countless anecdotal stories on the topic, I can say with absolute conviction that a “turf battle” is the least of the C&E profession’s concerns. These are the folks that former federal prosecutor Michael Volkov has called the “unsung heroes” of the workplace and his 2011 Person of the Year.

Compliance officers are often the least political, least power-hungry folks at the company holiday party. It may sound cliché, but most CCOs are driven by their own internal desire to “do the right thing,”—i.e., just what they ask their company colleagues to do every day. And they do this, more often than not, without personal recognition, career protection, or understanding of the job by others whose support they need to do the job well. Many work under extraordinarily difficult circumstances—under so much stress, in fact, that in a 2012 survey 60 percent pondered leaving their jobs.

Does that sound like a power-hungry professional profile to you? I’d say there are safer ways to get ahead in life, like bank robbery. Because at least then you have a gun and a getaway car . . .

The CCO mandate is ambitious, broad, and complex: no less than to oversee their organization’s ability to “prevent and detect” misconduct. It requires, as its basic platform, an appropriate reporting structure, access to top management and the board, and resources that will enable the CCO to discharge that mission. The SCCE survey results show that most CCOs do not believe that either a double-hatted GC/CCO role or a reporting line through the legal department meet these standards, as further illustrated by the following comments by participants:

- “The GC and the CO must be separate but equal.”

- “The great majority of GC’s do not have the background, worldview, and experience to be, or be in a position to veto/filter, the CCO.”

- “Compliance should be independent of Legal to ensure that information flow is not interrupted or ‘spun.’ ”

- “GC tends to have a defensive outlook and approaches issues differently than Compliance.”

- “If the (Ethics) and Compliance officer is to be most effective they must feel confident to speak truth to power and be the disruptive thinker when necessary.”

That last “truth-to-power” comment takes on dramatic real-life significance when viewed against the alleged “vast” Wal-Mart Mexican bribery scheme that hit media headlines in 2012 . Evidently, the compliance-reporting-to-legal structure didn’t work out so well for Wal-Mart. According to the exhaustive 8,000-word New York Times investigative report on that case, the general counsel is alleged to have had a key role in advising the CEO to “hush up” an internal investigation by referring it to the local counsel who had approved the bribes in the first place.

An independent CCO voice in the C-suite may have helped the company to choose a very different path. As the government noted in 2009’s record-breaking $2.3 billion Pfizer corporate integrity agreement [PDF]: “The lawyers tell you whether you can do something, and compliance tells you whether you should. We think upper management should hear both arguments.” Recent reports indicate that Wal-Mart is already paying the price for its bad C-suite decisions—over $600,000 a day in legal costs and expenses (not to mention reputational damage), to be exact.

The SCCE survey results also track developments in the healthcare and finance sectors, two highly regulated industries that have helped to define the meaning of modern “compliance.” In the former, the heavy hand of government has regularly resulted in a mandatory separation of legal and compliance. In the latter, after years of subordinating the CCO to the GC, at least four big banks have now separated the functions and elevated their CCOs to a more impactful position. At least one of those firms also boosted its CCO to the ranks of its top 50 managers.

Developments like these are what led Deloitte and Touche Director Tom Rollauer to declare the CCO “an official member of the C-suite.”

The SCCE survey results confirm that Volkov’s “unsung heroes” are more than ready to emerge from under the shadow of the GC, a result that boards, regulators, investors, and other stakeholders are increasingly demanding.

Author: Donna Boehme is an internationally recognized authority and practitioner in the field of organizational compliance and ethics, designing and managing compliance and ethics solutions within the U.S. and worldwide. As principal of Compliance Strategists LLC, Boehme is the former group compliance and ethics officer for two leading multinationals and currently advises a wide spectrum of private, public, governmental, academic, and nonprofit entities through her NJ-based consulting firm. She was named by ComplianceX to its list of “Who Compliance Professionals Should Follow on Twitter in 2013,” so follow her on Twitter @DonnaCBoehme.

More … http://www.law.com/corporatecounsel/PubArticleCC.jsp?id=1202592518804&Making_the_CCO_an_Independent_Voice_in_the_CSuite

Boards must be proactive to execute governance responsibilities - http://www.chaordicsolutions.co.uk/blog/from-our-compliance-consultants/boards-must-be-proactive-to-execute-governance-responsibilities/

http://www.chaordicsolutions.co.uk/blog/from-our-compliance-consultants/boards-must-be-proactive-to-execute-governance-responsibilities/

Boards must be proactive to execute governance responsibilities: five issues which every company should examine.

 

Extract from Corruption, Crime & Compliance – Michael Volkov:

Life is full of anxieties.  We all know that.  Some suffer worse anxieties than others.  As I often say, anxiety comes and goes.  Anxiety cannot be measured but is something that everyone experiences on their own terms.

Corporate boards suffer anxiety.  When a group or organi ation suffers anxiety, the possible damage to an organi ation can be significant.  In some respects the whole of the anxieties can be more than the sum of the parts.  As a result, corporate boards, like individuals, have to take affirmative steps to manage their anxieties, respond to them and protect themselves from poor decision-making.

When identifying and measuring issues of concern for corporate boards, there are at least five major and basic worries that every board has to address, no matter what their industry or where they are located.  The global economy has now set in motion global anxieties.

I am not talking about issues of concern which are obvious – of course, every board has to focus on the obvious issues like: How will the economy perform? Will Congress address the sequester and bring about meaningful tax reform?  We all know about these issues, read about them every day, and listen to our politicians’ bloviate on them during 24-hour news presentations.

Instead, I want to focus on five issues which every company should examine, which may not be so obvious.  Or as I like to say do not require a profound grasp of the obvious.

Corporate governance means just that – governance.  And corporate boards need to be proactive if they want to carry out their duties and responsibilities.

1.  The rise of social media and mobile technology.  The story of our economy for the next few years will be written on social media and mobile communications.  Today there are more mobile devices connected to the Internet than the world’s population.  Nearly 300,000 tweets are sent every minute.

Companies have been slow to recogni e this reality and the implications of our Twitter nation.  It has been estimated that only five percent of US companies have embraced social media across all of its stakeholders (consumers, managers, employees, board members).

Companies are starting to communicate through social media.  Consumers interact with companies through mobile technologies.  Government regulators are rapidly starting to focus on corporate policies, practices and issues which occur in the social media space.  Companies have to embrace social media and analy e the implications for risks and competitive advantages.

2.  Cybersecurity.  The government and companies recogni e that cybersecurity is now an imperative.  Companies need to act to assess the risk of an attack, the cost of an attack, the direct harm to the company, the reputational risk and the need to protect the company from potential economic devastation.

3.  Information Management.  We are all suffering from information overload.  Social media and the internet have made us aware of too much information.   It is estimated that information overload costs US businesses nearly $1 trillion each year in reduced worker productivity.  The new trend, which is rapidly developing, is how to manage information overload so that companies and individuals access the proper amount of information.

Google is developing new and more effective algorithms for search results.  Information filters will become even more important as consumers and citi ens are bombarded with information which can cause overload and inefficiency.

Corporate boards suffer from the same phenomena.  Too much information means ineffective governance.  Key issues are lost in thick and useless reports which only waste time and energy.  Corporate boards need to address information efficiency – the new term for corporate governance.

4.  Government Enforcement and Regulation.  One of the legacies of the Obama Administration will be its commitment to increased government regulation and enforcement.  It has been a long time since the government has played such an active role in regulating business and enforcing the laws and regulations.  This trend will not end when the Obama Administration leaves in 2016.  The American public is comfortable with the current balance between economic freedom and regulation.  If anything, it can be argued that the public wants even more enforcement.  Companies have to recogni e this trend, prepare for it and refrain from delusional desires of deregulation.

5.  Creative Compliance.  One sure way to put a damper on a corporate board meeting is to invite the Chief Compliance Officer to make a compliance presentation to the board.  Traditionally, board members like to focus on the “fun” issues – financial performance, high-level strategy, business expansion plans and market assessments.

When it comes to compliance, board members like to brush those issues to the side.  The challenge for compliance professionals is how to make compliance integral to corporate performance.  Scary enforcement stories are usually just a teaser for more important discussions and strategies.

How does a compliance officer communicate the importance of compliance, the need for compliance to play a greater role in the business operation, and the importance of board commitment, focus and support?  This is the challenge for the profession over the next five years.

More … http://corruptioncrimecompliance.com/2013/02/high-anxiety-five-basic-worries-for-every-corporate-board/?

Opportunity to participate in new GRC implementation barrier research

http://www.chaordicsolutions.co.uk/blog/from-our-grc-consultants/opportunity-to-participate-in-new-grc-implementation-barrier-research/ Opportunity to participate in new GRC implementation barrier research   From Robert J Toogood, Senior Partner – Chaordic Solutions: Some of you may already know me through my work with the Institute of Risk Management (IRM) and the recent setting up of the new GRC Special Interest...

Compliance culture has major impact on ethical performance