This presentation of emerging risks should be contrasted with compliance failures, including substantiated historical allegations by subject matter and market. Mitigation measures may include advising the board on terminated employees, historical training numbers, resource allocation, planned compliance assessments, and how adjustments will be made to the program based on historical and emerging risks. Maybe training, different controls or a new audit process will be added to a particular market or business line. But the board has to understand how the compliance program will improve based on new risks and historical failures.
Be Heard
The second challenge for the compliance lawyers is to ensure the message is understood. An effective presentation to help directors meet their obligation must be clear, organized and designed to ensure the directors understand how the organization is managing compliance risk.
In 2010, now retired U.S. Army General Stanley McChrystal was shown a PowerPoint that purported to indicate the complexity of the United States' military strategy in Afghanistan, that, according to The New York Times, looked like a bowl of spaghetti. McChrystal remarked, "When we understand that slide, we'll have won the war."
Charts and statistics are both invaluable for developing a risk-based compliance program. But at the end of the day, the presenter has to understand how to present complex data in simple terms that the board can understand — without the benefit of the presenter's day-to-day involvement in the compliance program.
Technology is critical to a risk-based compliance program. It can help compliance lawyers identify emerging risk and make real-time adjustments to the compliance program. As effective as high-tech tools may be in managing a program, they are no substitute for the old-fashioned communication tools of organization, critical thinking, and reacting to your audience.
In response to the military chart ridiculed by McChrystal, General H.R. McMaster, who banned the use of PowerPoint during his time in Afghanistan, noted that PowerPoint is dangerous because "it can create the illusion of understanding and the illusion of control."
So, this year, compliance lawyers should save the technology for managing their program and use their people skills to communicate with the board. Talking plainly to board members will help them understand what they should worry about and what the company is doing to alleviate their concerns.
Ryan McConnell is a partner in Morgan, Lewis & Bockius in Houston and a former assistant U.S. attorney who has been known to use Simpsons characters in his PowerPoint presentations. His email address is rmcconnell@morganlewis.com.
