Navigating Compliance Challenges in the Digital Age: Insights from Industry Leaders
June 6, 2023
Fairwords had the pleasure of hosting key compliance leaders across the financial, energy trading, and pharmaceutical industries on a recent webinar to discuss compliance challenges in the digital age. This live session was not recorded, so in lieu of that, we put together this summary to share with you.
Six major themes emerged during the discussion:
The ongoing impact of COVID on corporate compliance
The influence of the DOJ’s new communications guidelines on compliance
Challenges and strategies in managing digital communications
Leveraging emerging communications channels
Mitigating risks associated with mobile devices and messaging apps
The role of accountability and transparency in compliance
Impact of COVID-19 on Corporate Compliance
In the face of the pandemic, corporate structures underwent massive changes which deeply impacted compliance strategies. Key points include:
Unprecedented Shift: The pandemic forced businesses into unanticipated Business Continuity Policies (BCP) scenarios, which necessitated rapid changes in how personnel worked and communicated together in a new remote/hybrid-remote world.
Emergence of New Risks: Many firms responded to such changes by adopting new technologies, including various communication technologies that were intended to provide a convenient way for employees to communicate remotely, but that also had compliance implications and their own risks. Due to the suddenness of the pandemic’s spread and the prolonged nature, these compliance implications and risks took on a new profile – no longer being temporary but instead becoming the norm.
Need for Balance: The pandemic accelerated both the development and adoption of new technologies, and it is now more important than ever for compliance professionals to help find practical solutions that bring back a balance between business convenience and regulatory compliance.
Influence of DOJ’s New Communication Guidelines on Compliance
The Department of Justice’s (DOJ’s) new communication guidelines clarify compliance expectations and should be used to inform compliance practices.
Know Your Own Guidelines: The new communication guidelines offer additional insights into one piece of a very large, and ever-growing “compliance puzzle.” Compliance professionals need to understand how all the various pieces fit together in order to craft an effective compliance program.
Best Practices Now a DOJ Expectation: Prior settlement agreements have highlighted some of the compliance concerns applicable to digital communications (e.g., monitoring and preservation), and many companies adopted as a “best practice” increased compliance safeguards with respect to digital communications prior to the DOJ’s new guidelines. The new guidelines have now made those “best practices” a government expectation.
Compliance and Convenience must go hand-in-hand: The guidelines should be used to reasonably design processes, policies, trainings, and systems that function to ensure convenience does not trump compliance.
Challenges and Strategies in Managing Digital Communications
The rapid evolution of digital communication technologies presents unique challenges and opportunities for compliance leaders.
Pace of Technological Developments: Understanding the pros and cons of various digital communication channels and ensuring compliance is a significant challenge.
Cross-functional Collaboration is a Must: Achieving effective compliance requires input and coordination across departments, including Legal, Compliance, HR IT, and often external vendors. Compliance is a collaborative effort.
Privacy versus Compliance: Balancing employees’ right to privacy with DOJ expectations is a challenge, and transparency and trust-building play crucial roles in managing this delicate balance.
Leveraging Emerging Communication Channels
Compliance teams need to stay ahead of emerging communication channels to ensure regulatory alignment.
Proactive Compliance: Compliance leaders should familiarize themselves with various communication channels and be proactive in understanding the benefits and potential risks associated with each.
Policies: Firms are focusing on implementing explicit policy changes to encourage compliant communication behavior. Transparency about new policies and the ramifications for not following them are keys to employee understanding, trust, and adherence.
Education and Training: Reinforcing compliance training among existing employees, and making compliance training part of onboarding new employees, is a priority. Consistent education helps employees remain compliant.
Mitigating Risks Associated with Mobile Devices and Messaging Apps
Compliance leaders can adopt several strategies to mitigate risks associated with the use of mobile devices and messaging apps.
Building Trust: Getting buy-in from employees and upper-level leadership to ensure everyone understands the need and rationale for compliance requirements is crucial.
Leveraging Technology: New technologies, including AI, can be used to monitor and improve business communications.
Understanding Limitations: It’s important to understand the limitations of vendors and ensure there’s an internal understanding of specific needs, data collected, etc. to ensure partnerships with vendors are as beneficial as possible.
The Role of Transparency and Accountability in Compliance
Transparency and accountability play a pivotal role in running effective compliance programs.
Importance of Transparency: It’s important to be upfront about when (or if) employees can expect privacy when it comes to business communications and to manage expectations appropriately.
Accountability and Consequence Management: Ensuring accountability and consistent consequence management is critical. It’s also beneficial to reward positive behavior as well as remediate non-compliant behavior. Consistency in both reward and discipline will improve the success of compliance programs.
Cross-functional Approach: Compliance, Legal, HR, and IT departments should collaborate closely to ensure fair, consistent, and effective compliance management. The more collaboration there is, the more likely compliance programs are to succeed, particularly when it comes to new initiatives in the organization or material changes to existing business.
In conclusion, corporate compliance in the digital era requires a balance of leveraging technology, upholding transparency and accountability, and fostering a culture of collaboration, trust, and compliance throughout the entire organization.