Compliance And Risk Management In Today's Business World

Dave Yarin is a compliance and risk management consultant to senior management and directors of large and mid-size companies, and author of the soon to be published book, Fair Warning – The Information Within.

Yarin follows and researches news stories regarding ignored warnings that lead to bad business outcomes, along with the social psychology theories that explain why these warnings were ignored.

This week, Yarin shared with me insights into compliance and risk management, his forthcoming book, and leadership.

Q and A with Dave Yarin

1. How does a compliance and risk management consultant help senior managers of large and mid-size companies?

Yarin: There are two approaches; ideally proactive but also reactive when necessary. Proactively, a compliance and risk management consultant helps companies to set up world-class compliance programs that help to mitigate risk by ensuring oversight of the compliance function, educating employees, creating and updating written standards, investigating reports of non-compliance, and implementing auditing/monitoring activities.

When an instance of non-compliance has already occurred, a compliance and risk management consultant can help the company to investigate the matter and assess liability, advise on appropriate responses and mitigation steps, and work with the company and legal counsel if necessary in litigation support and/or in communicating with third-parties such as the government who may be investigating the matter.

Compliance and risk management consultants can also work with companies to assist with due diligence in acquisition transactions.

2. What is the typical engagement length of time with a company?

Yarin: They vary. I've worked with companies on short-term engagements that may last a few months - for example in helping to strengthen a compliance program, or for several years when there is a government investigation or when serving as a monitor or advisor pursuant to a government settlement agreement.

3. After your engagement is done, who typically at a company is the person to act or lead action in response to a warning?

Yarin: Typically, the Chief Compliance Officer, often in connection with legal counsel, is the person who leads action in response to a warning. Given this part of the Chief Compliance Officer's role, it's critical that his or her function be independent of other functions within the company (e.g. finance) so that he or she can investigate and respond to the warning thoroughly and appropriately.

4. What is an example of an ignored warning that led to a bad business outcome?

Yarin: Let's take the recent experience with General Motors as an example. They had multiple warnings within the company for several years that they were using a defective switch within cars that could lead to terrible outcomes, yet they didn't act until it was too late, particularly for the individuals who died or were injured in car accidents resulting from the faulty switch. If you review the chronology and details of the matter, it becomes clear that the reasons for the lack of response to these warnings goes well beyond merely financial pressures.

5. What is the most prevalent reason warnings are ignored?

Yarin: The most prevalent reason that warnings are ignored is that unfortunately, it's part of human nature that we're "hard-wired" to either ignore warnings or not act on them. Social psychology offers multiple reasons and support for why this is the case. Look at the social psychology called "the normalization of deviance." It basically tells us that if we engage in an activity or allow an activity to continue that we know may have a bad outcome, yet initially one doesn't occur, we're lulled into a false sense of security on this activity and will stop listening to warnings about it. It's at the heart of many of the most newsworthy disasters and bad outcomes that have occurred in the business world and elsewhere. It's almost as though we're "playing with the odds" until something bad happens.

Another tendency is for individuals and companies to over-focus on one item (e.g. sales, growth) at the expense of other areas (e.g. safety, quality). The good news is that if companies recognize this aspect of human nature, they can incorporate activities into their business that can help to both listen to and respond appropriately to credible warnings.

6. What prompted you to write your forthcoming book, Fair Warning?

Yarin: I remember back when the Space Shuttle Challenger exploded in 1986, and being horrified not only by the loss of the 7 astronauts, but also to learn that in the months that followed, an engineer at Morton Thiokol was warning his supervisors and NASA about the very problem that caused the shuttle to explode, yet nobody acted upon his warnings, despite his credentials and data that he presented. That story always stuck with me, but I'd see the same thing happen again and again; the Bernie Madoff ponzi scheme, the explosion of BP's oil rig in the Gulf of Mexico...and I searched for a reason why fair warnings continued to be ignored. Eventually, I came upon the social psychology theories that provided a deeper explanation to why this occurs.

7. Why does one not hear much about your type of consulting?

Yarin: I believe companies have woken up to compliance and risk management consulting. Historically, businesses may have mistakenly viewed it as a cost with no ROI, but in today's highly-regulated world, and with the risks to companies constantly growing and changing, there is an increased appreciation of what good compliance consulting can offer to help a company.

8. Do you provide on-site speaking at companies interested in compliance and risk management?

Yarin: Yes

9. When will your book be published?

Yarin: I hope to have it published within the coming year.

Yarin lives near Boston, Massachusetts with his fiancée and two children. For more information please visit his website and follow Dave on Twitter.

Comments

The Benefits Of When Everyone Leads

It’s only January and the new book, When Everyone Leads , could likely be my pick for the best new leadership book of 2023. It’s that good. There’s still nearly a whole year ahead of us so we’ll see what other books debut. In the meantime, add this book to your must-read list. You’ll learn that: Leadership is an activity, not a position. Leadership is mobilizing others to make progress on the most important challenges. Leadership is interactive, risky and experimental. Leadership comes in moments. Leadership is always about change. When Everyone Leads , by Ed O’Malley and Julia Fabris McBride , presents a revolutionary approach to leadership; not based on position or authority, but an activity that anybody can undertake by learning to spot opportunities for improvement and taking the initiative to engage others. “It can be unfamiliar and uncomfortable, but in a culture where everyone leads, organizations start to make progress on their most difficult problems,” explain t

Effective Listening: Do's And Don'ts

Here are some great tips from Michelle Tillis Lederman's book, The 11 Laws of Likability . They are all about: what to do and what not to do to be a leader who's an effective listener : Do : Maintain eye contact Limit your talking Focus on the speaker Ask questions Manage your emotions Listen with your eyes and ears Listen for ideas and opportunities Remain open to the conversation Confirm understanding, paraphrase Give nonverbal messages that you are listening (nod, smile) Ignore distractions Don't : Interrupt Show signs of impatience Judge or argue mentally Multitask during a conversation Project your ideas Think about what to say next Have expectations or preconceived ideas Become defensive or assume you are being attacked Use condescending, aggressive, or closed body language Listen with biases or closed to new ideas Jump to conclusions or finish someone's sentences

Five Must-Read Business Books To Read This Summer

Stumped for what business books to add to your summer reading list? Here are five must-read books for leaders well worth adding to your list: Lead With A Story -- A Guide To Crafting Business Narratives That Captivate, Convince, and Inspire . Author Paul Smith explains why storytelling has emerged as a vital skill for every leader and manager. In the book, you'll find over 100 ready-made stories you can use as templates to tell your stories. Stories are so powerful because they are simple, timeless, demographic-proof, contagious, easy to remember and inspiring. Most important, they put the listener in a mental learning mode. What's The Future Of Business? (WTF?) -- Changing The Way Businesses Create Experiences . This book, by Brain Solis, details the incredible transformation happening in business today, driven by new social and mobile technologies. And, he explains how experience design helps your business and how you can harness its power for business growth. This book

How To Make The Leap To Becoming A Leader

Here’s another must-read book to add to your list as you transition from manager to leader. It’s The Leap to Leader , by Adam Bryant . As the creator of the iconic “Corner Office” column in the New York Times , Bryant has spoken with more than a thousand leaders over the years about the challenges and nuances of leadership. Many of his discussions are included in his interview series on LinkedIn. “The goal of this book is to provide an intensely practical guide to making that transition by sharing insights, stories, and approaches from hundreds of leaders to build the skills you will need to make the leap to leader,” explains Bryant. He adds that the book is useful to everyone who is interested in leadership, regardless of where they are in their career. The book covers: The central paradox of leaders: selfless vs. self-centered. How to perfect the do-to-say ratio. Ways to navigate office politics. Tactics to making better decisions. The crucial art of compartmentalizati

How To Lead With Heart

Those who lead with heart consistently have discussions with their teams about their unexpressed needs, fears, desires, gifts, and sense of purpose , explain the authors of the compelling book, Leading With Heart . CEO coaches and authors John Baird and Edward Sullivan share that anyone can learn how to make an authentic connection with their teams in order to drive better outcomes. And their book provides readers clear and practical insights to help them succeed in making those connections. Be sure to read the highlighted key principles and takeaways at the end of every chapter. Baird and Sullivan further share that workers today want to feel respected, seen and appreciated for who they are. That’s why companies with the best retention, morale, and productivity are led by leaders with heart. As Alexander Den Heijer said, “ When a flower doesn’t bloom you fix the environment in which it grows, not the flower .” “In heart-based cultures, people feel safe pushing back and

Eights Ways To Demonstrate You Value Your Employees

There are eight specific actions business leaders can take to show that they value their employees , according to Andrew Leigh , author of the book, Ethical Leadership -- Creating and Sustaining an Ethical Business Culture . Those eight behaviors are: Attention -- Pay attention to what people say to show your interest. Listen -- Make time to hear what colleagues, peers and employees have to say to show you care. Positive Language -- Find words and phrases to show employees they're needed. Examples are, "We couldn't have accomplished this without you," "That was really useful." Document -- Put praise in writing to increase its impact. Make clear where the credit belongs. Micro Sessions -- Create two-way communication sessions. Visits -- Schedule visits to teams and work areas. Stories -- Share stories that highlight unusual contributions and provide your personal response to them. Invite -- Ask people to contact you directly with their issue

How To Be A Go-To Person At Work

Bruce Tulgan ’s book, The Art of Being Indispensable at Work is all about how to win influence, beat overcommitment, and get the right things done in your workplace . Tulgan says that what truly sets “go-to people” apart is how they think and what they do, including: They understand the peculiar mathematics of real influence – doing the right thing for the long term. They lead from wherever they are – going vertically before going sideways (or diagonally). They know when to say no and how to say yes . They work smart – creating checklists, step-by-step instructions, and professionalizing everything they do. They finish what they start . They get better and better at working together . They promote “go-to-ism” – finding other indispensable people throughout the organization and building new go-to people whenever there’s a chance to do so. Other characteristics of indispensable people , are: Maintaining a positive attitude Doubling down on hard work Taking personal res

Seven Tough Questions To Ask Your Team

High-functioning teams can disagree and still produce excellent products and results. Team members can also disagree and still care about each other. And, they can challenge each other to think differently. Best-selling leadership book authors Scott J. Allen and Mitchell Kusy recommend that leaders ask seven tough questions of their teams to help maximize their results. Here are those questions to ask each team member: What are some obstacles affecting this team? What are opportunities we could take advantage of that we have been largely ignoring? Where can you take greater ownership on this team? Where have you let this team down ? Compared to other teams with which you are familiar, how are we doing ? When was the last time you complimented the team or one of its members? How open are you to giving direct feedback to team members?

How To Listen Effectively

Here are some great tips from Michelle Tillis Lederman 's book, The 11 Laws of Likability . They are all about: what to do and what not to do to be a leader who's an effective listener : Do : Maintain eye contact Limit your talking Focus on the speaker Ask questions Manage your emotions Listen with your eyes and ears Listen for ideas and opportunities Remain open to the conversation Confirm understanding, paraphrase Give nonverbal messages that you are listening (nod, smile) Ignore distractions Don't : Interrupt Show signs of impatience Judge or argue mentally Multitask during a conversation Project your ideas Think about what to say next Have expectations or preconceived ideas Become defensive or assume you are being attacked Use condescending, aggressive, or closed body language Listen with biases or closed to new ideas Jump to conclusions or finish someone's sentences

How Leaders Can Move Teams From Isolated To All In

Here is a book that provides workplace leaders an urgently needed methodology for helping companies to reduce worker loneliness, and it delivers a blueprint for building strong, high-performing workplace teams. The book is, Connectable: How Leaders Can Move Teams From Isolated To All In , by Ryan Jenkins and Steven Van Cohen . “72% of workers suffer from loneliness. And, what was once a simmering problem shifted to a crisis when COVID-19 and the sudden transition to remove work isolated workers from each other as never before,” report the authors. “Loneliness is the absence of connection,” explain the authors. “Loneliness is not defined by the lack of people, because someone can be lonely even while surrounded by others. We require more than the presence of others. We require the presence of others to dream, strategize, and work toward commons goals.” Furthermore, “workplace loneliness is defined by the distress caused by the perceived inadequacy of quality connection to team

Eric Jacobson On Management And Leadership

Search This Blog