Fifty years ago in Washington D.C., Martin Luther King Jr. departed from his prepared remarks and delivered a speech that left an indelible mark on the American conscience. No PowerPoint, no technology — just imagery and cadence. He watched his audience, not a screen.
In an age where so many of us rely on technology and PowerPoint presentations, the most effective communicators understand that, to persuasively present ideas, you have to understand your audience and react to signals sent to the presenter in real time.
One of the challenges compliance officers will face this year is communication — providing the board of directors with the information they need about the company's compliance program — and they will need to know how to pay attention to people instead of a slide.
Boards of directors rely on the general counsel or a compliance lawyer to describe the existing and developing risks for the organization, as well as historical and future efforts to mitigate compliance risk. In addition to the federal sentencing guidelines and New York Stock Exchange listing requirements, directors have corporate law duties to understand risks faced by the company and ensure the organization is effectively mitigating those risks. The failure to do so has economic costs for the company, shareholders and directors, as highlighted in the statistics published by NERA Economic Consulting, which tracks securities litigation related to compliance failures (among other things).
To ensure directors understand compliance risk, GCs and compliance lawyers must know both what to report to the board and how to deliver the message.
The first challenge is deciding what to tell the board about the compliance program. Compliance lawyers properly advise their board on the compliance program when they give them three key pieces of information:
1. emerging compliance risks,
2. historical compliance failures, and
3. mitigation efforts undertaken by the organization.
To advise the board on emerging compliance risks, the compliance lawyer must track new legal developments that pose compliance risks, new markets the company will enter, and benchmarking to show risks that peer organizations are considering. This may be accomplished by sharing compliance risk information with peer compliance officers or by conducting benchmarking exercises (for instance, following which risks companies are elevating into their codes of conduct for a certain industry).
