Gut Check: How Many People on Your Board of Directors Know Your Chief Compliance Officer’s Name?

By August 4, 2017 No Comments

It’s long been said that an effective compliance program can’t exist without a strong culture of ethics and compliance – especially one that’s driven by tone from the top. Since employees will look for direction from above, doesn’t the Board play a critical role?

I’m certain that it does. I’m less certain that many boards are prepared to carry out this important duty.

Directors may understand their fiduciary duties, but many often fail to fully grasp how abstract tasks translate into concrete compliance program oversight obligations, according to Doug Harmon, who leads Parker Poe’s Securities & Corporate Governance group and its Public Company Growth & Compliance group.

In an article for Corporate Compliance Insights, Harmon points out that enforcement and regulatory agencies, as well as plaintiff’s attorneys, expect boards to be more than just generally aware of the company’s compliance program – or expect to shoulder liability when things go awry.

I like Harmon’s take on the situation, and I especially like his tone. There’s some urgency here that we all should heed.

And here’s a starting place: a list of questions to consider regarding the quantity and quality of time your board actually spends in compliance oversight:

  • Could each of your directors name the company’s CCO? Do you have a CCO?
  • Does the CCO have direct access to the board and utilize that access regularly?
  • Does the board understand how the compliance function is structured and operates?
  • Is the board satisfied that the company’s compliance function matches up with the company’s strategic plan and risk appetite?
  • Is it enough that the board receives an annual 15-minute, multicolored PowerPoint presentation summarily proclaiming that the company’s compliance house is in order? How about once per quarter?
  • Should the board have a separate risk oversight committee, rather than delegating compliance to its overworked audit committee?
  • Does the board understand its responsibilities in the event of a compliance breach?
  • Does the board periodically review the company’s compliance training program and itself participate in regular compliance training?

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Published by Conselium Executive Search, the global leader in compliance search.  

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