Maureen Brundage, general counsel at The Chubb Corp., sees compliance and ethics as a fast-moving field. Think bribery, economic sanctions, data security, insider trading, unfair trade practices — a dynamic mix of changing laws and jurisdictions.
"Failure to do compliance right … can be the end of a company," Brundage says. "It affects their stock price, it affects morale, it affects other companies’ willingness to do business with them."
Chubb, headquartered in Warren, N.J., is an insurance company with 34 lawyers in the state and another 18 around the world. It has 10,000 employees worldwide, with offices in 27 countries.
For such a company, "where reputation is everything," compliance and ethical conduct are at its "heart and soul," she says.
"You can’t not take action against risk. The question is, What is the appropriate risk appetite for the organization?" Legal and regulatory compliance programs, she says, form a key part of the answer.
Among the many reasons that monitoring compliance in the insurance field can be difficult, Brundage says, is that "there are sometimes knee-jerk reactions. People often think, ‘You’re not making widgets that are being exported to North Korea, so you don’t have to worry about economic sanctions.’ But anything that facilitates a prohibited transaction — which would and could include insurance — is [concerned], and it takes effort to understand where this could be implicated. Also, conflicts of laws can complicate matters. In certain jurisdictions outside the U.S., the laws don’t go as far, or they may conflict.
"You can thread the needle of compliance, but the laws often are not that clear, or are new," she says. At the end of 2012, for example, new Iranian sanctions were put in place with "not much guidance."
Another recent change involves Myanmar. It had been problematic doing business in Asia, and then, "seemingly overnight, with the regime change there, there was a relaxation both by the U.S. and the E.U. of prohibitions against Myanmar. You’ve got to keep nimble. You’ve got to keep up to date with the changes in regulations. They can impact you positively or negatively," Brundage says.
Compliance and ethical standards are set at the top, she says, but the tone in the middle and the tone at the bottom are equally important. "Basically, for compliance, it’s the tone everywhere" that encourages people to take responsibility for their behavior.
Chubb has an elaborate structure in place to help assure compliance with regulatory and other legal requirements, as well as ethical behavior in all its activities.
Brundage, who became general counsel in 2005, is also the company’s chief ethics officer. As a result, regulatory compliance is partly the responsibility of the General Counsel Department, and many Chubb attorneys are involved in compliance-related work on a regular basis.
In 2011, a Compliance Group was established within Brundage’s office to help manage compliance efforts. Paralegal Jeanne Seigle serves as legal compliance and ethics coordinator.
As chief ethics officer, Brundage chairs the Legal Compliance and Ethics Committee, which meets quarterly. The LCEC helps the chief ethics officer — herself — ensure the effectiveness of compliance and ethics programs. LCEC members include senior management representatives from corporate departments and business units. Brundage reports each quarter on the LCEC activities and other compliance matters to Chubb’s Audit Committee.
Sometimes one of these groups forms a task force, or arranges training tailored to a particular group or issue. For example, Brundage says, bribery is a "hot area, [so] a lot of training is done with employees who work in accounting and finance, because these are the people responsible for detecting problems — or who could be involved in it themselves."
In 2012, the LCEC was restructured to reduce the number of members and formalize their roles. Chubb also formed a Legal Compliance and Ethics Council, made up of members of top management, which meets annually to review compliance and ethics issues.
The compliance and ethics program is reviewed at least annually by Chubb’s Executive Committee. Chubb says this top-level involvement helps drive compliance initiatives throughout the company.
Compliance is a company-wide responsibility, with some employees engaged in it full time, while others are involved as the need arises. In 2012, 80 Chubb employees worldwide worked in compliance on a full or substantial part-time basis.
Brundage says this structure works well for a midsized company. "In my experience, it’s been very effective. … Not that we’re centralized, however: the mantra at Chubb is ‘Everyone owns compliance,’ but, even so, it’s important to have a core of resources," she says.
There is no "one size fits all" way to manage compliance and ethics in a corporation, however, and Brundage says some larger companies with more resources believe that the law department and compliance efforts should be managed separately.
"My view on compliance programs in general is that it’s an evolution. To be effective, it should not be static. You can review, revise and recreate to address evolving risks and risks in business." In 2012, for example, Chubb refreshed its Code of Business Conduct to make it more employee friendly. Translation: less legalese.
Speaking of translations, the code is now available in English and 15 other languages.
"If you really believe compliance is important and want people to comply," Brundage says, "then it’s almost rude not to do it in their native language. … [We] tend to be very U.S.-centric. So recognizing the fact that we are a global organization shows a sensitivity that helps keep headquarters from being seen as ‘the ugly American.’"
Employees who want advice or who wish to report suspected noncompliance with the Code can contact any of a number of managers, the chief ethics officer or the company’s Voice of the Employee Program (VOE).
Access to VOE is available 24/7 via telephone or Internet. In 2012, Chubb implemented what it says is "a more robust" VOE program.
Some reports are about "not liking the new color of the office" or "the food in the cafeteria is not good." However, VOE is meant to deal with much more serious concerns. "The good news," Brundage says, "is that although employees have raised issues that were subsequently investigated, we have not had any serious legal complaints or violations that we’ve had to deal with" as a result.
Chubb’s Compliance and Ethics website has now also been translated into languages used by employees around the world. The website makes it easier to be compliant by providing codes, policies, procedures and training. Brundage says that she’s gotten no official feedback, but the unofficial reaction has been positive. "Silence speaks volumes," she says; the big change is that she is not hearing complaints about it.•