LOOKING AT YOUR COMPLIANCE PROGRAMME THROUGH THE EYES OF A PROSECUTOR

R&C: Given recent shifts in regulatory activity and changing priorities due to the COVID-19 pandemic, to what extent has the importance of compliance programmes declined? Do companies need to guard against complacency?

Kirby-Harris: In responding to COVID-19, compliance has been just as important as ever, and has had to take account of unusual and unique, risk-generating circumstances. Companies are facing novel business and financial pressure from the COVID-19 crisis which has heightened compliance risk. Experience teaches us that financial pressures from a crisis can lead to risky behaviour. Increased pressure on employees to make sales or complete contracts intensifies the risk of compliance challenges. In the context of a market downturn, there is greater risk of market manipulation and insider trading. With supply chain disruptions, companies may have to urgently find new business partners, possibly leading to reduced vetting, exposing companies to money laundering and bribery and corruption risk. In this environment, a renewed focus on robust compliance programmes is, in many cases, a business priority.

Morgan: We have seen various compliance risks emerging that are unique to the pandemic. In working from home, companies may not be working in as centralised a way as before and in some companies or industries there may be less employee visibility. Corporates will need to ensure training is fit for purpose in a remote setting and encourage employees to report potential issues even when they are not face-to-face, which can be a more challenging step to take. The shift to greater online interactions also heightens the threats posed by cyber attacks, which are even more detrimental given the dependence on digital tools. During these unique times, many corporates have rightly prioritised risks relating to the health and safety of their employees and managing the immediate risk of disruption to their businesses. However, effective compliance cannot take a back seat. Mitigating compliance risks now will help limit the disruption caused by COVID-19 in the long run, helping to ensure that the disruption is not exacerbated by investigations or litigation once we emerge from the current crisis.

Jul-Sep 2021 Issue

Freshfields Bruckhaus Deringer

FTI Consulting