This podcast series returns to one my favorite themes for every Chief Compliance Officer (CCO), compliance professional and compliance program: Sherlock Holmes. In Adventures in Compliance, I consider themes from the short stories found in Holmes storiesto illustrate broader application to components of a best practices compliance program. Today, I consider the theme of imagination in your compliance program.
The Adventure of the Empty House may well be one of the most famous in the entire Holmes oeuvre. It was the first story in over ten years, although Doyle set the tale only three years after the meeting of Holmes and Moriarty at Reichenbach Falls. Returned from touring the world, Watson and Holmes have an emotional reunion (at least for Watson) and then begin to tackle a locked room murder. This leads to Holmes being in jeopardy and putting a mannequin in his window to draw an attempted assassination attempt by Colonel Sebastian Moran, a henchman of Dr. Moriarty. Moran uses an air rifle which makes the murder and attempted murder all the more sinister.
In every recent Deferred Prosecution Agreement (DPA) and Non-Prosecution Agreement (NPA) issued by the Department of Justice (DOJ) they all include an element along the following strictures, “The Company will conduct periodic reviews and testing of its anti-corruption compliance code, policies, and procedures designed to evaluate and improve their effectiveness in preventing and detecting violations of anti-corruption laws and the Company’s anti-corruption code, policies, and procedures, taking into account relevant developments in the field and evolving international and industry standards.”[Emphasis supplied]. This means that the DOJ expects imagination in your compliance program to keep up with evolving international and industry standards. This requires your imagination in your compliance strategy.
All of this means you should begin with a strategy for your compliance program. The key to success is something that every CCO or compliance practitioner should take to heart; which is that a compliance practitioner must be able to lay out a strategy for compliance that details the efforts to support the overall business strategy. This means creating a compliance program that will create value for customers, i.e., employees, third parties and customers; show how the company will capture that compliance value going forward and finally which types of compliance imagination to pursue.
If you have a good strategy, it can promote alignment among diverse groups in a company, help to clarify objectives and priorities and guide your focus on those objectives. It can also be modified as necessary and with sufficient feedback. There are several questions you need to consider in connecting your strategy to the business. Initially, how will it create value for the customers of compliance; i.e., your employees and relevant third parties? Your imagination can make compliance faster, easier, quicker, nimbler and so on. Focus on that creation of value going forward. Next what types of imagination will allow the company to create and capture value, and what resources should each type receive, such as a change in technology and a change in a business process?
Obviously senior management has a key role around imagination in compliance, as it can be driven downward or backward if there is not sufficient management support. This means not only must there be sufficient resources allocated but management must also incentivize the business units to proceed with implementing the imaginations. Another area where senior management is critical is with making trade-offs. A supply-push approach comes when your imagination is focused on something that does not yet exist, for example if you are initially implementing a Foreign Corrupt Practices Act (FCPA) compliance regime. A demand-pull approach works more closely with your existing customer base to determine what they might need and works to implement imagination around those needs.
Finally, consider what every speaker from the DOJ or Securities and Exchange Commission (SEC) says when they talk about the basics of any best practices compliance program. It is that both compliance and strategies must evolve. You must recognize that your compliance program will have to be innovative. Start with a strategy, that has senior management buy-in and support, then move to implement. Finally use data in a feedback loop to fine tune your imaginations. Imagination in compliance is one of the key differences between those who advocate static compliance standards embodied in a written paper program and those who advocate an operationalized compliance program and it is the latter that creates an active, vibrant and effective compliance program. That is the bottom line for imagination in compliance.
I have used three primary resources in putting together this series: Maria Konnikova’s Mastermind (Konnikova); the online site shmoop.comand its blog post, The Return of Sherlock Holmes (shmoop); and finally the most seminal print work on the entire Holmes canon, the three-volume The New Annotated Sherlock Holmes (Klinger) edited with notes by Leslie S. Klinger.