In-House Counsel

Cost effective compliance risk assessment (continued by Jeff Kaplan)

By Rees Morrison

This is the fourth in a series of five postings by Jeff Kaplan on compliance and ethics (C&E) programs and cost (See my post of March 8, 2009: embedding risk assessment into codes of conduct.). Here, I address the topic of training. Training is generally the most costly part of C&E programs for companies. But it is less often the most effective or efficient part.

Sometimes this inefficiency is the result of assigning training in a largely indiscriminate manner ? which can be unduly costly not only in terms of the expense of the training itself but also the use of trainees? time. A way to avoid such a shotgun approach is to develop a curriculum ?map,? so that training and other C&E communications are delivered on a truly need-to-know basis, for instance, along the following lines:

Board of directors: training should cover a) oversight of the C&E program; and b) risks relevant to their position, such as conflicts of interest, confidential information, financial reporting, insider trading and certain, other securities law issues.

Senior managers: training should cover a) the risk areas already mentioned for boards; b) use of company resources; c) depending on the industry, possibly others (e.g., lobbying); d) their general role in the C&E program (such as maintaining an ethical organizational culture, avoiding the creation of pressure likely to cause C&E violations, leading by example, and monitoring their subordinates? activities); and e) for some senior managers, risk areas of those whom they supervise (e.g., antitrust for those who supervise sales activities.)

The curriculum map should include other groups as well, such as: mid-level managers; different functions; control personnel (lawyers, auditors, HR and others); and, in some instance, third parties (such as independent agents). For global companies, the curriculum should, at least for some topics, provide for course assignments based on geography.

The final dimensions of the map should be a) frequency of training for given subjects and audiences (which can help avoid unnecessary repetition); and b) delivery methods - with genuine training used for high-risk subjects, and other, less impactful, forms of communications deployed for lower risk ones.

Full post as published by Law Department Management on March 15, 2009 (boomark / email).