By Rebecca Walker
A client recently came to me with an interesting question and something of a dilemma. Leadership of this particular company were reluctant to implement an enterprise-wide conflicts of interest policy because of a desire to be sensitive to the various cultures in which the company operates combined with a sense that conflicts is not a significant risk area for the company. The question of the potential risks created by conflicts of interest is a discussion for another post. In this post, we explore the very interesting question of how to go about assessing whether a particular compliance policy should be applied consistently on an enterprise-wide basis or could instead vary by region, country or business unit.
Thinking through this question with a group of smart and thoughtful lawyers from the company afforded me the opportunity to give serious consideration to relevant factors to be considered in determining which policies should be enterprise-wide in their applicability. (We also considered the important but distinct question of which policies should be owned by Ethics and Compliance versus some other function, although that topic will also be saved for another post.) We came up with a list of factors to consider, which may be useful to other organizations. Indeed, one thing that struck me as we went through this exercise was the extent to which these questions are so often decided in a rather ad hoc way – by circumstance, corporate history, enforcement history, or even force of personality – rather than through consideration of relevant factors.
In the interest of transparency, I should perhaps preface my discussion of those factors that we considered with the disclosure that, as an outside lawyer, my bias tends to be in favor of centralized, corporate ownership of policies because that structure just feels less risky.
The factors that we identified as relevant to the question of enterprise-wide versus regional applicability include:
There are undoubtedly additional relevant factors that the client and I failed to identify in our short (but so interesting!) brainstorming session. If you think of others, please let us here at Ideas & Answers. We’d love to expand on our list.
With respect to that client and its conflicts of interest policy, the jury is still out, but I’m hopeful that our brainstorming session gave the compliance team some reinforcing arguments as to why an enterprise-wide conflicts of interest policy would benefit the organization. I should note that we also conducted some helpful benchmarking that indicated that a substantial majority of multinational companies have enterprise-wide conflicts of interest policies, which will likely be more persuasive to senior leaders than our list of relevant factors.
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