Monthly Archives: April 2016

April 30, 2016 · 2:12 pm

Why honest people break the rules

A trader, who was paid millions in compensation, cheated by overstating the value of his trading position. “A Disgraced Trader’s Struggle for Redemption,” The Wall Street Journal, April 30, 2016 A1.  He now teaches classes to business students.

“He started off furious with the bank for encouraging him to take so much risk. He resented the industry for its no-holds-barred culture, which he blamed for making him think it was OK to cheat. He raged at the media for invading his privacy.”

Does your company culture encourage cheating or compliance?  If you violate the rules, do you look for weaknesses in your environment or in yourself?

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Filed under Business Case, Controls, Culture, Duty, Employees, Governance, Internal controls, Risk

April 30, 2016 · 1:59 pm

What’s information worth?

Knowing where something is can be more valuable than just knowing what it is.

“Johnson Controls Unravels Riddle of Missing Crates,” The Wall Street Journal, April 30, 2016 B1.  It’s worth $1-$5 each to keep track of shipping boxes for an auto parts maker.  Versus the cost of a bar coded sticker. 830,000 times.

Is there something in your supply chain for which similar treatment would be an improvement?

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Filed under Collect, Controls, Data quality, Governance, Information, Internal controls, Management, Operations, Oversight, Use, Use, Value

April 29, 2016 · 5:39 pm

Rank doesn’t have its privileges

You’d think that chief executives would by now have learned that having relationships within the work environment poses certain hazards.

“Priceline CEO Resigns After Relationship With Employee,” The Wall Street Journal, April 29, 2016 B1.  Relationship was a violation of the company’s code of conduct.  Cost:  about $13 million in stock grants.  Plus, plus.  Stock dropped 2.7%.

What does the cascade of such cases say about the culture of the companies involved?  If the boss does it, it must be okay, right?

Pretty bog-standard code of conduct violation, except it was the boss.Follows in the hoof-steps of chiefs at HP, Starwood Hotels, and Boeing.  And a General.

But at least the policy was enforced.

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Filed under Board, Compliance, Compliance, Controls, Culture, Culture, Duty, Governance, Internal controls, Management, Policy

April 29, 2016 · 5:29 pm

Can I have that in writing?

What happens if you do a reorganization and delete a department head without clearly establishing who’s going to pick up the various responsibilities of that department?

Apparently, Credit Suisse wasn’t clear, so now there’s a “discussion” of who was responsible for $1 billion in losses from a department that no longer had a manager.

“Inside Credit Suisse, Finger-Pointing and Confusion Over $1 Billion Loss,” The Wall Street Journal, April 29, 2016 C1.  In October 2015, the global head of fixed income stepped down (or was stepped down).  Between then and January 2016 or so, no one was watching that store.

Lesson:  close the loop and connect the dots.

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Filed under Board, Business Case, Business Continuity, Communications, Controls, Directors, Duty, Duty of Care, Governance, Internal controls, Management, Operations, Oversight, Oversight, Protect, Protect assets, Protect information assets, Risk

April 28, 2016 · 11:58 am

Cost of failure to disclose

How much can it cost you if you don’t tell your bank about how many other loans you have?

“World Bank Is Suspending Direct Financial Aid to Mozambique,” The Wall Street Journal, April 28, 2016 C2.  World Bank holds back $40 million in loans after learning that Mozambique had more than $1 billion in undisclosed loans.

Devastating for Mozambique.  But what does it tell us about compliance?  What requirements did Mozambique agree to?  And does one part of a large organization necessarily know what every other part is doing or what requirements have been agreed to?  How do you communicate contractual requirements internally?

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Filed under Business Case, Communications, Compliance, Controls, Governance, Internal controls, Investor relations, Oversight, Requirements, Risk, Third parties

April 27, 2016 · 2:58 pm

The shelf life of a lie

If your company’s culture permits fudging the numbers, when did that culture start, and how has it been perpetuated?

“Mitsubishi Used Improper Fuel-Economy Tests for Some Cars Since 1991,” The Wall Street Journal, April 27, 2016, B5.  Company admits to making up fuel economy data and submitting it to the Japanese government, beginning 25 years ago.

“‘This is a problem that threatens the existence of our company,'” said the company’s president.

Is there a business case for having a culture that does not lie, cheat, or steal?

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Filed under Business Case, Collect, Compliance, Culture, Duty, Employees, Governance, Oversight, Risk, Use

April 25, 2016 · 4:19 pm

Sim City

One of the challenges of information governance in a corporation is dealing with the stupifying amount of information that gets accessed, generated, and received by the business and its employees and agents.  What if the challenge were to do that for an entire city?

“Singapore Is Taking the ‘Smart City’ to a Whole New Level,” The Wall Street Journal, April 25, 2016 R4. Singapore is a city-state that has more than 5.5 million residents.  It uses sensors and cameras to track residents, cars (and when and where they are used), construction, cleanliness of public spaces, smoking, littering, and wind-flow patterns.  Some information to be made available on a online platform.

What do you collect?  What do you use?  How do you protect it?

What can you learn from this?

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Filed under Access, Analytics, Business Case, Communications, Culture, Duty of Care, Governance, Investor relations, New Implications, Oversight, Privacy, Reliance, Security, Use

April 23, 2016 · 4:52 pm

The “everybody does it” defense

It would appear as though the auto industry has a problem with accuracy.

“Volkswagen Posts Loss on Charge; Germany Recalls Other Cars,” The Wall Street Journal, April 23, 2016 A1.  VW, Daimler, and GM caught up in the investigations.  On Friday, there was a report of another car scandal in Japan.  “Mitsubishi’s Efficiency Scandal Points to Big Competition Among Japan’s Tiny Cars,”Wall Street Journal, April 22, 2016.  Fudging the numbers on fuel economy.

Is lying a violation of your company’s Code of Conduct?  Or is that only lying internally?  Does your company’s culture punish lying, or fudging the numbers?

What else is being fudged?

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Filed under Business Case, Collect, Compliance, Controls, Culture, Data quality, Duty, Duty of Care, Governance, Information, Internal controls, Management, Oversight, Risk, Use

April 22, 2016 · 4:24 pm

Power to the players!

Major League Baseball, rather than imposing a rule, allows the players to decide their own unwritten rules for celebrations.  “Manfred: Unwritten Rules Left to Players,” The Wall Street Journal, April 22, 2016 D8.

If rules are unwritten, who enforces them?  Culture is the behavior that is accepted in a community.

Does your company, department, team, club, fraternity/sorority, church/synagogue/mosque, social group, family, or friendship have unwritten rules?  If you don’t comply with them, what happens to you?  Is that compliance in action?

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Filed under Controls, Culture, Duty, Employees, Governance, Internal controls

April 21, 2016 · 2:57 pm

Personal criminal liability

“Three Officials Criminally Charged Over Flint Water Crisis,” Wall Street Journal, April 21, 2016 A3.

Consistent with the Yates Memo (DOJ, September 9, 2015), three individuals were charged with criminal conduct following the contamination of the water supply for Flint, Michigan.

But what were they charged with? Thirteen felonies and five misdemeanors,including misleading federal environmental authorities, tampering with evidence, and manipulating samples.  Those are all information-related crimes.

Does your business include speaking with federal regulators? Supplying monitoring reports?  Taking samples?

These are just the state charges.  See also, 18 USC § 1519.

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Filed under Business Case, Collect, Compliance, Compliance, Controls, Duty, Employees, Internal controls, Management, Risk