Likewise, 89 percent have input into mergers & acquisitions or market expansions (up from 77 percent four years ago); and 66 percent have input into new products or services (up from 52 percent). These arrangements should be in writing. Ethisphere has released another analysis of its World’s Most Ethical companies, finding a move toward a more clearly defined chief ethics & compliance officer role and more direct reporting to senior leadership. The former assesses the fiscal risks a company takes as it invests or undertakes new projects. That’s good. Many of the CCO interviewees emphasized the importance of having an insider view on what is happening and being a trusted ear for employees so that they can identify potential compliance issues before they spiral. First, news about job titles: at 76 percent of WME firms, the person with overall ownership of the ethics & compliance program has the title of chief ethics and compliance officer — although only 35 percent of firms have that person. In some companies, Compliance does not have its own Officer. Therefore, to generate hypotheses about the questions posed in the introduction, I interviewed 70 GCs and compliance officers of S&P 500 corporations across a variety of industries including banking, pharmaceutics, and petroleum. The first report looked at trends in Codes of Conduct and written policies, among other issues. . Although they are motivated by external or economic incentives (“carrots”) to perform routine tasks, this is not necessarily the case when it comes to more complex work or decision making that involves using judgment, ethics, and creativity. In the first Ethisphere analysis published last month, that report explored how the firms were trying to be more transparent with employees (and even outsiders) about what the ethics & compliance function actually did; and how the firms were using technology to give employees a better, more interactive experience when reading the Code of Conduct and written policies. To increase transparency and ensure that lawyers were billing ethically, firms began demanding lawyers report their time spent per client in smaller and smaller increments. Now we have this report, showing that more CCOs among this group have input into strategic issues. And each of these stakeholders likely has different goals for the organization and the structure of the compliance department, ranging from increasing power and influence, to mitigating repercussions of future misconduct, to protecting reputation, to deterring misconduct. The study, released on Thursday, is the second in a series of reports Ethisphere is publishing about the 128 firms that made its WME list for 2018. 1 Depending on the institution, some functions of the Chief Compliance Officer (CCO) may be allocated to the Chief Risk Officer (CRO), Chief Financial Officer (CFO), and others. Risks are commonly categorized as strategic, reputational, operational, financial, or compliance-related. I don’t dispute that these firms have a solid commitment to ethics and compliance — but they aren’t necessarily representative of all large firms as a whole, if you want to compare your own organization’s practices to what WME has identified here. For example, 95 percent have “significant input” into supplier and procurement processes, compared to only 67 percent in 2015. Sometimes doing good really is its own reward. Ultimately, my analysis indicates that we shouldn’t rush to put a new “C” in the C-suite. This in the wake of investment firm employees or executives acting as chief compliance officers, on top of other responsibilities. Chief Compliance Officer Chief Compliance Officers … People do not necessarily recognize an ethical dilemma as an ethical dilemma when it is presented to them. found that lawyers are not as adept as other professionals at creating effective programs and procedures to prevent risk, their research supports a structure in which the lawyers are the ultimate superintendents of it. . Lawyers who have moved into the compliance department are not the only ones who might experience a (negative) shift in power and influence as a result of departmentalization. Chief risk officers and chief compliance officers are board members who work in corporate settings. Auditing & Monitoring The problems posed to multinational corporations today are more complex than ever before, requiring teams of people with different expertise to collaborate to understand what the regulations require, where to apply them, and, most important, how to comply and implement them. Combine this with human beings’ tendency to re-create history and view their own actions as more ethical than they were (for example, sugar coating) and it is no wonder that systems designed to promote ethical behavior fail. As two interviewees stated: The entire legal department—which includes compliance, by the way—does report up to me as the chief legal officer but we are organized across business lines as well. 5. Chief Compliance Officer. Now we have this report, showing that more CCOs among this group have input into strategic issues. But in my job, I say, “I think you should fire this person,” and they just have to unless [they can] give a really good reason why they shouldn’t. A series of underemphasized and unintended consequences of departmentalization are important to draw out in order to answer the “so what” question more appropriately. the chief legal officer (CLO), or even the chief financial officer (CFO). While there are some limitations to the study (such as a small sample size and nonrandom selection), the data and the stories of respondents—combined with relevant secondary material and other surveys—provide powerful insights into the current and potential future of the compliance function. If the only things wrong with departmentalization are what opponents emphasize—such as the risks of turf wars, inefficiencies, and the demonstrated success of lawyers in managing the conflicts of interest that exist between compliance-reporting obligations and protecting the corporation—then what’s the big deal? Once in that position, it becomes hard for a major corporation to explain why they don’t need a compliance department. By examining the literature and conducting interviews with 70 GCs and CCOs, I hypothesize that preemptive departmentalization may not be in the public’s best interest due to potential unintended consequences that offset the alleged benefits of departmentalization. The general counsel’s job is more black and white; [for example,] ‘These are the legal risks.’”. The biggest caveat for all this data is that we have only 128 firms in the sample size, and they landed in that population because Ethisphere selected them. It has fallen primarily to the chief medical officer to forge this alliance, to form a meaningful and operational liaison between hospital administrators and physicians. Departmentalization silences the “lightning-rod man” and decreases the emphasis on risks. A chief data officer (CDO) is a corporate officer responsible for enterprise-wide governance and utilization of information as an asset, via data processing, analysis, data mining, information trading and other means.CDOs usually report to the chief executive officer (CEO), although depending on the area of expertise this can vary. Should there be a new “C” in the C-Suite? ... consulting with management and reporting. the Chief Compliance Officer .....18 Corporate Responsibility and B. Although Rosen et al. Organizational Structure Options • Centralized – The compliance department has more employees who report through the Chief Compliance Officer and are responsible for overseeing and implementing the compliance and ethics program. As one CCO explained to me, the best part of the job. Rosen et al. Should they serve like cops, counselors, spies, a blend of the three—or something else altogether? 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