Managing Corporate Risk in Uncertain Times
In this article, Preston Pugh and Chief Compliance Officer Troy Morgan of Bioverativ discuss the prevalence of high-risk crises across industries, the predictors that accompany them, and how corporate executives can manage corporate risk through proactive compliance strategies. "These corporate crises over recent years have been triggered by predictors that we have seen before: overly aggressive growth strategies without proper controls; decentralized reporting structures that allow divisions to run themselves with little to no oversight from corporate headquarters; tolerance of short cuts; and 'star gazing' or allowing senior executives to act with impunity," Pugh and Morgan wrote. "The investment needed to create an ethical culture and effectively manage compliance risks are a cost of doing business the right way. However, the true costs of leaving those risks unaddressed—including harm to the company’s brand, loss of investor and market trust, and organizational and personal liability—are much greater," the authors wrote. "Thoughtful action needs to be taken at the most senior levels to ensure compliance and an ethical culture, and often that does not come easily."