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Compliance and overcoming new challenges

Main takeaways from our webinar

by Viviane Joynes 3 min

    On Wednesday 20th May 2020 our UK Managing Director Viviane Joynes hosted a webinar about how compliance teams can overcome new challenges during the COVID-19 pandemic as well as coming into the ‘new normal’ where more individuals are likely to be working remotely. Our expert panel was made up of Federica Taccogna and Nigel Webb, both Partners for Financial Services at FTI Consulting and Nick Marshall, a Managing Associate at Linklaters.

    This article summarises the main takeaways from a fascinating discussion.

    1. Proactively manage your risk profile

    In these unprecedented circumstances, the risk landscape has rapidly changed for many organisations. Take trading floors in financial institutions for example, where trading has never been permitted outside the office environment and now traders are working from their living rooms. Another example is the onboarding of new suppliers and clients where the lack of face-to-face interaction inherently increases risk. Firms are no doubt taking on more risk than they realise. The question is how do businesses and their compliance teams maintain the integrity they have built over years while allowing the business to continue functioning?

    According to both Nigel and Federica, this is a balancing act. When certain risks are increasing, it’s important to trim back elsewhere. Taking the trading example of traders being allowed to continue working remotely, the risk is being balanced in some firms by limiting the deal sizes as well as not dealing with certain high-risk counterparties. Enhance client monitoring. For clients that were high risk during normal times, do you still want to do business with them? Do you want to take on high risk clients during this time or wait until normality resumes?

    Ensuring that business units as the first line of defence understand the risks that they are running and providing guidance where possible is an essential role of the compliance team during this time.

    Most importantly, as Federica mentioned, humans have a natural tendency to focus on the positive. Be proactive, recognise risks and work towards creating enhanced compliance structures to deal with greater risks. Make sure that you won’t be facing the repercussion a few months or years down the line.

    2. Ensure whistleblowing hotlines are visible and responses to reports are prompt

    Whistleblowing hotlines are essential to identifying areas of risk and as such need to be promoted so that employees are aware of their existence. This is particularly important when employees are working remotely and not always interacting with their manager and teams on a daily basis. As Nick mentioned, many organisations have seen an uptick in reports coming through their hotlines about health and safety issues, which is not surprising during a pandemic. However, organisations also need to be alive to areas such as sexual harassment and bullying which still exist but often in different guises. Promoting hotlines remains a key part of the speak-up strategy.

    Just as important as ensuring that hotlines are visible is responding to reports promptly and conducting investigations. Organisations need to make sure that the right people are available to deal with reports that come though. This is key to engaging and building trust with employees, which is especially important with organisations starting to plan to return to physical offices.

    3. When changing processes, don’t forget to update policies

    Many organisations have had to rapidly change processes to accommodate new working environments and on the whole have done this and communicated the changes effectively to their employees. However, as Federica highlighted, when processes change, the organisation needs to consider the full life cycle of these implications. What is linked to these new processes that needs to change, for example updating policies that is sometimes left by the wayside when leading with more urgent matters. If the appropriate changes aren’t made this may result in a lack of clarity and potentially increase risk in the future. New employees might end up looking at old policies that don’t correspond to new working processes. Ensure that policies, procedures and controls are all in line with one another and updated to avoid any confusion.

    4. Effectively communicate your policies and procedures

    Most organisations use a combination of email and the intranet to communicate policies and procedures. While this may feel adequate, according to Federica there are pitfalls to this approach as there is no way of understanding whether new policies and procedures have been read and understood. During this time, when it is important to remind employees about existing policies such as health and safety and whistleblowing as well as informing them of updated policies and procedures, evidence of engagement and attestations is particularly important. This can be easily achieved using specialised policy management software to not only communicate with employees but also track their engagement.

    5. Make online training engaging

    Eight weeks ago, Nigel had never conducted training using online platforms such as Zoom or Microsoft Teams and now at FTI Consulting they are running training programmes for many of their clients on these platforms and feedback has been very positive. As people have become less camera shy, new more scalable, interactive and engaging options for training are opening up. Perhaps a benefit of these times. How can these platforms be leveraged within organisations to conduct training more effectively?

    Nick also added an important point about training and furlough. He clarified that employees can undertake training when they are on furlough as long as they are not contributing to the business and that they receive the national minimum wage (if their furlough pay is less than this) while doing the training. A good opportunity to have a more skilled-up workforce when normality resumes.

    6. Make tactical changes to digitise processes

    While full scale digital restructuring that affects core systems wouldn’t be recommended during this time, Federica recommends tactical changes that can digitise administrative processes to make them more efficient. Some quick wins could be how you manage your policies and procedures or your case management for reported incidents. Use this time as an opportunity to review and see what improvements you can make in the short term.

    7. Avoid common governance failings

    Some of the most common failings in normal times are poor governance and poor-quality management information. A quick checklist: are the right people meeting? Are committees composed of the right people? Are they meeting frequently enough? Do they have quality information upon which they can take reasonable decisions? According to Nigel, all too often the answer is no to a lot of these questions. During the pandemic when companies are generally exposed to more risk, weaknesses are being exposed in broad daylight. Now is a good time to review governance and management information to be better set-up going forward.

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    Viviane Joynes
    Viviane Joynes

    Managing Director – EQS Group | Viviane is Managing Director of EQS Group’s UK Business. She has extensive experience of advising UK and European companies on their corporate governance, compliance and IR practices. Prior to joining EQS her roles included heading up the IR Services at Capita Asset Services (now Link Asset Services) and being Managing Partner of a corporate governance and communications consultancy.