This presentation has been delivered by Stéphane Martin at the PECB Insights Conference 2018 in Paris

1. Is it a risk to be
compliant?
Stéphane Martin
CEO Smart Risk Consulting
Co-Founder Risk-!n

2. 2
Me
Stéphane Martin

3. 3
Where do we start?
Definitions for Compliance
 Google:
 the action or fact of complying with a wish or command
 Cambridge English Dictionary:
 the act of obeying an order, rule, or request
 the state of being too willing to do what other people want you
to do
 ISO 19600:2014:
 meeting all the organisation’s compliance obligations

4. 4
Major Compliance Standards*
 Securities and Exchange Commission/ Department of Justice, A Resource
Guide to the US Foreign Corrupt Practices Act
 US Federal Sentencing Guideline Manual Section 8B2, Effective
compliance and ethics programs
 UK Bribery Act Section 9, Guidance about procedures to prevent bribing
and framework
 BS 10500 Anti-bribery Management System
 Italian Decree No. 231/2001 Sections 6 and 7
 Australian Standard AS 3806-2006, Compliance Programs
 German Attestation Standard AssS 980, Audit of Compliance Programs
*Source: EY report, ISO 19600 International standard for compliance management

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Major international compliance initiatives*
 ICC Rules on Combating Corruption
 OECD Good Practice Guidance on Internal Controls, Ethics, and
Compliance
 United Nations Convention against Corruption
 Open Compliance & Ethics Group (OCEG) — RedBook
 COSO — Committee of the Sponsoring Organizations of the
Treadway Commission
*Source: EY report, ISO 19600 International standard for compliance management

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Compliance…
…to what
• International standards or Policies
• Definitions
• Compliance to company rules & controls
• Personal standards
• …

7. 7
Karaoke – The Sound of Compliance

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Compliance Quiz
1. Please raise your hand if you think the company you are operating
in, is compliant today.
2. Please raise your hand if
you think the company
you are operating in, is
compliant taking into
account the last 10
years of operations.

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Globalization of economies
 The more you are compliant the more incompliant economies are
growing as they attract uncomplicated businesses and
entrepreneurs.
 Industry leaders uses intermediaries. The smaller you are the least
compliance obligations you apply.
 Why?

10. 10
Compliance Hope
Is your company compliant in 2018?
We all hope until we find otherwise
LafargeHolcim: “(…) charged with complicity in Syria
crimes against humanity. (…) cement firm suspected of
paying nearly €13m to Isis and other militants”
Source: www.theguardian.com
“Shell and Eni face one of the biggest corruption cases in
corporate history over $1.3bn Nigerian oil field”
Source: www.independent.co.uk

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Compliance Hope
Is your company compliant in 2018?
“In April, Wells Fargo
was fined $1 billion to
resolve probes into
lending abuses.”
Source: www.businessinsider.com

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Late actions are …expensive
WHY WAIT?

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Natural fear
We pretend we are surprised, it is just a matter of time…
 It is all discovered too late or after
implementing measures, what does
that tell us?
 We are reactive, not pro-active
 Not challenging Senior management!
 “If I talk I lose my job, I gave so much to
this company!”
Source: unknown

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Consequences on individuals
It is worse than you think
 Former CFO of Siemens was sentenced to 2 years of prison on
probation
 Former CEO of Enron was sentenced to 24 years of prison
 Former CEO of WorldCom was sentenced to 25 years of prison
 What else:
 Refund
 Divorce
 Suicide

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Consequences on individuals
Is it unfightable?
 Employees don’t care about company’s money so what:
 People remember how they felt
 Once it happens you are done, you lose everything so make
them feel like it
 Him: “It won’t happen to me!”
 You: “Well if it does, what do you think will happen?”
 Stop fight the causes, you know them, start showing the
consequences. Work on human behavior.

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Compliance is a man made disaster
How do we work?
John Marie
1
2
0
New local
legislation
Fluffy e-learning
Inexplicit and wrongly
adapted compliance
policies
3
4
5
Please
implement
…

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Positive Compliance
Compliance to risk appetite
Facts: Indianapolis Friday, June 17, 2005, 21:12 time Europe, Ralf
Schumacher's tire on Toyota bursts in turn 13. Cause: unknown
Safety Principle : Michelin recommends
to its 7 customers teams,14 cars, not to
race. Toyota, Renault, McLaren-
Mercedes, Williams-BMW, Bar-Honda,
Sauber Petronas and Red Bull
750 million viewers and 130,000
spectators deprived of Grand Prix
Impact on image and business,
especially in the USA ???

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Positive Compliance
6 months later
No markets loss, especially in the United States
Enhanced confidence in Michelin, both in the F1 sector and in the
automotive sector in general
Michelin company seen as "serious, respectful of safety, respectful of
its customers".
From
To
0
10
20
30
40
50
60
70
6/1/05
7/1/05
8/1/05
9/1/05
10/1/05
11/1/05
12/1/05
1/1/06
2/1/06
3/1/06
4/1/06
5/1/06
6/1/06
Michelin share price
06.2005 to 06.2006

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Compliance Risk Management
What about it?

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Corruption Perception Index 2017
*Source: 2018 Transparency International. www.transparency.org/cpi

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10 Anti-Corruption Principles For State-
owned Enterprises*
1. Operate to the highest standards of ethics and integrity
2. Ensure best practice governance and oversight of the anti-corruption programme
3. Be accountable to stakeholders through transparency and public reporting
4. Ensure human resources policies and procedures support the anti-corruption
programme
5. Design the anti-corruption programme based on thorough risk assessment
6. Implement detailed policies and procedures to counter key corruption risks
7. Manage relationships with third parties to ensure they perform to an anti-corruption
standard equivalent to that of the SOE
8. Use communication and training to embed the anti-corruption programme in the SOE
9. Provide secure and accessible advice and whistleblowing channels
10. Monitor, assess and continuously improve the implementation of the anti-corruption
programme
*Source: Transparency International

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Whistleblowers
 Why would you do this?
 Faith in compliance
 Reward
 Jealousy
 Right
 Promotion
 Want to be fired
 You are already fired
 Helplines are essentials.
The braves or the unconscious

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Fighters
Does it help to fight financial crime?
1. Stop focusing on past events but communicates on misbehaviors
2. Report on crime attempts & forward looking indicators, red flags
 Refusal to take mandatory vacation or sick leave
 Employee lifestyle changes
 Significant personal debt and/or credit problems
 Borrowing money or requests for pay advances
 Easily annoyed at reasonable questions
Source: www.strategiccfo.com

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Fighters…
& technology
 Technology drives compliance reporting
 Question: How to trust humans outside systems, emails, sms…
 If you can ‘t trust you can:
 Control
 Train
 Monitor

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Timing
When do you chose to be compliant for?
Now Later
Too
late
1. What does it take to be compliant in time, money and resource
wise?
2. If I’m not compliant what are the consequences? How bad can it be
for the company and for me?

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Simple?
Compliance IS black and white - Either you are compliant
either you are not
Compliance is a must vs Do I need to be compliant?
UPS spokesmen “It’s the cost of doing business.”
$1.8 million/year$1 million/year
Source: http://www.digitaljournal.com

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Applying risk management principles, implementing ISO
19600, 37005, 27005, 31000…
Wrap-up
Remember: You take more risks in not doing anything
Informed &
risk based
decisions

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One last gig – Compliance: The Musical

29. The end is the beginning!
Stéphane Martin