©2015 Association of Certified Fraud Examiners, Inc.

WELCOME Navigating Compliance in

Current Global Markets

Scott Lane, The Red Flag Group

• The roles of the global compliance officer and

general counsel are getting more complicated as

they now deal with public scrutiny and exposure

while complying with laws and changing

regulations.

• Identify challenges and pitfalls facing compliance

functions and the role of the compliance officer.

• Recognize the importance of cultural characteristics

in a global organization.

• Respond to compliance challenges in the current

global market with the top 50 things to do.

IDENTIFY CHALLENGES AND

PITFALLS FACING COMPLIANCE

FUNCTIONS

• The Compliance Business

– There is no doubt that the compliance industry is

growing, becoming more important to business, and

being recognized as its own profession.

– It is now growing internationally at a significant pace,

with more and more people joining the community.

– The risk areas are increasing, the demands are

increasing, and the expectations of stakeholders are

increasing.

– More and more audit and investigations teams are

being merged into the compliance function.

• Companies are the subject of increasing obligations that don’t

seem to be slowing down

Bribery and Corruption

• FCPA and UK Bribery Act

• Prosecutions by multiple

countries

• Crackdown by China

Human Rights and Slavery

• New UK Modern Slavery Act

• Significant developments in

countries in Europe and Asia

Collusion & Price Fixing

• New laws on collusion in

emerging markets

• PRC and other countries using this

as a sword against foreign

companies

Environmental

• Constant development of

environmental legislation in

multiple countries

• RoHS

Safety

• Constant development of

safety regulations and

expectations in multiple

countries

• REACH

Regulatory

• Dodd Frank

• California Transparency

• Conflict Minerals

• Managing risk involves more people and

more coordination

Audit

Product

Quality

Legal

Finance

CSR

Export

Sourcing

Business

Corruption

& Bribery Data

Security

Personal

Information

Health

&

Safety

Employee

Rights

Sanctions

Environmental

Politics Export

Control

Human

Rights

Modern

Day

Slavery

IP

Animal

Testing

Sustainability

Conflict

Minerals

REACH

Diversity

Climate

Change Irresponsible

Marketing

Collusion

& Price

Fixing

Money

Laundering

• Companies don’t have a unified platform to

manage compliance

Unified Platform

for Integrity &

Compliance

Risk

Management

Risk

Management

Product

Groups

CSR

In-Country

Teams

Industry

Consultants

and Experts Legal and

Compliance

Finance

Logistics &

Shipping

Manufacturing

ERP Systems and Procurement Systems

• People. Process. Technology.

People

Process

Technology

More audits from customers that will be more detailed

and have greater weight with ‘pushed down’

responsibility

More investigations from authorities across a broader

spectrum of countries

More accountability for channel partner and supplier

issues

• Companies are being held responsible for the acts of their

business partners and suppliers even in the absence of

causation and knowledge.

• More legislative changes are pushing more obligations

onto companies to self-manage and not rely on

governments to enforce and prosecute

Modern Day

Slavery

Corrupt

Practices

Sanctions Supplier

Transparency

• Consumers make decisions based on

emotion, and negative issues will affect

consumer demand if boycotts are

activated.

• Potential liability and reputation damage

caused by issues becoming known and

having ‘trial by media’

Challenge for Trial by Media

Boycott and

industry groups

Global topical issues

24Hr Media Cycle

• Cost Challenges

– Increased pressure on companies to reduce

costs means there is a need to show the value

of what compliance is doing and how it is

driving the business.

• Improving the Profession

– Common challenges in helping compliance

move the profession beyond:

– Defensive box checking

– Police/enforcement

– Roadblocks to sales

– Unnecessary policies with minimal movement

for local issues

– Disconnected from reality

Disconnect from

HQ

Languages and

cultural elements

Lower perception

of risk by the

business

Language

challenges

Local

government

enforcement

Local competitors

Lack of experts

locally

• Cultural Challenges

• Foreign companies are under the spotlight

in local markets, especially in China:

– Enforcement of issues is increasing in China,

Russia and other key markets, yet many

companies try and roll out ‘global’ programs

across businesses that are multiple $B in

certain markets

RESPOND TO THE

CHALLENGE

Drive more efficiency into

compliance and the business

Challenge assumptions on how

things are done and why

Add more value to growing the

business

Get predictive

Do more with Less

• Overall Message

Training

Administration

and Management

Screening and

Due Diligence for

Third parties

Audits and

Reviews

Middle Tier

Investigations Technology

• Challenge what you are doing

Identify low risk

work

• Identify work

that is repetitive

and low risk

• Requires minimal

oversight

• Administrative

Resources

• Identify who is

best to do the

work

• Consider putting

compliance

resources in low

cost offshore

locations

• Utilize already

existing shared

services in your

company

Improve Efficiency

• Use your

offshore

compliance team

for low risk work

• Focus your

resources on

higher end risks,

predictive

analytics, and

getting ahead of

the risks

• Identifying ways to reduce costs

Push work to other

groups

Learn to sell

Charge the business

for direct costs

Merge costs into M&A

capital costs

Reevaluate suppliers

• Being more efficient

Business

Partnering

Stakeholder

Management

Change

Management

Process

Design &

Improvement

Budgeting

and

Reporting

• Developing your compliance team

Why does everyone need compliance training?

Are we really focused on the right areas?

Is the lowest cost resource managing these issues?

How to move beyond the “compliance has no budget” problem

How to get compliance to be predictive not reactive

• Challenge why you are doing things

• Channel stuffing

• Licensing issues Channel Partners

• Human rights and slavery

• Sanctions Supplier Risks

• Sanctions Customers

• Safety

• Environmental

• Human rights

Reputation

Risk

• Lots of new risks are evolving

Communicate

Show value

Calculate savings constantly

Understand the business

Understand their uniqueness

• Managing your stakeholders

Get

proactive

Get

predictive

Stop

checklists

Monitor

everything

Measure

and report

• Steps to be a great compliance leader

Great Compliance

Very

focused

on key

risks

Supportive

of

business

objectives

Get

proactive

and

predictive

©2015 Association of Certified Fraud Examiners, Inc.

WELCOME Navigating Compliance in

Current Global Markets

Scott Lane, The Red Flag Group