ISO 37001: The Good, The Bad and the Ugly (Part II of V)

by Michael Volkov
Contact

In Part II of my continuing series, I identify in broad strokes some of the more significant positive and negative aspects of ISO 37001. While it is easy to second-guess the ISO 37001 authors, there are some interesting issues that are addressed and some missed opportunities to advance ethics and compliance systems.

On the positive side, ISO 37001 is keyed to a valuable concept of “reasonable and proportionate” responses and strategies to mitigate bribery risk. I acknowledge that “reasonable and proportionate” is not so easy to define but with time and precedent, such a concept will become a helpful benchmark for companies to use in designing and implementing an effective anti-bribery risk management system.

ISO 37001 is replete with requirements that anti-bribery management systems document their compliance programs. As everyone knows and has heard me repeat over and over, documentation is a critical aspect of every compliance program. If an action or decision is not documented, then prosecutors are unlikely to believe that the event occurred. A compliance program without documentation is by definition an ineffective compliance program.

ISO 37001 also establishes, for the first time, a focus on due diligence and hiring of employees as a key control to mitigate bribery risks. This is a sound requirement and long overdue. So much attention has been paid to third party bribery risks that internal hiring, employee monitoring and associated risks have been ignored. Going forward, companies should look to its internal systems for screening and hiring or transferring employees to positions where they will encounter bribery risks.

On the negative side, ISO 37001 missed an important opportunity to define the relationship between anti-bribery risk management systems and financial controls. ISO 37001 includes only a general, one-line requirement that a company implement financial controls to mitigate bribery risks. That requirement is so general that it is in reality meaningless. Instead, compliance officers need a seat at the financial table when it comes to designing effective accounting controls. CCOs need visibility into the financial controls in order to cull out important data and information needed to monitor an anti-bribery system. After all, bribery requires unauthorized access to money and this is where bribery risks meet with the reality of corporate financial operations.

Too often in the corporate governance world, financial management systems operate separately from other parts of the company. Much of this reflects the historical impact of Sarbanes-Oxley that generated a much-needed improvement of internal controls, financial reporting and enhancement of the role of internal auditors. In the end, financial executives and staff created an internal monolith of financial controls and surrounding compliance with such controls.

The compliance function was not included in this revamp of corporate financial reporting. As a consequence, CCOs did not have a seat at the table. With the rise of the CCO and attendant responsibilities, CCOs have to inject themselves into the financial controls given the obvious connection between unauthorized access to money for theft, bribery and other illegal schemes. It is impossible for CCOs to complete their responsibilities without entry into the financial silo.

Unfortunately, ISO 37001 ignored this trend and failed to address this critical opportunity to transform the CCO into a major play when it comes to anti-bribery risk management systems.

Nonetheless, ISO 37001 is a step forward and a valuable contribution to the ethics and compliance field. As noted in my original post, there are still many remaining questions about the ultimate impact that ISO 37001 will have on anti-corruption enforcement and on the ethics and compliance field in general.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

Written by:

Michael Volkov
Contact
more
less

The Volkov Law Group on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.