COVID-19: ethics and compliance considerations

COVID-19 RESOURCE HUB  |  Financier Worldwide

COMPLIANCE & ETHICS

If the coronavirus (COVID-19) pandemic has taught us anything it is that ethical standards should not be compromised, especially at a time of considerable volatility and uncertainty. For companies under pressure to maintain their code of conduct, having recourse to an effective ethics and compliance function is essential.

On the flip side, what also is clear is that should oversight of such matters be sidelined or even ignored – assuming they were ever on the radar in the first place – the consequences for a company may be devastating, including fines, litigation and remediation expenses, as well as reputational damage arising from employee misconduct or failure to pass supervisory requirements.

“Ethical business decision making is critical for businesses,” says Michael Volkov, chief executive of Volkov Law Group. “In other words, ethics is not less important during this crisis; rather, ethics is even more important because of the difficult problems businesses are facing.

“Companies have to weigh the needs of the community in which they operate,” he continues. “This is a classic situation where ethical business decisions cannot be made in a vacuum but require broader considerations relating to the health and safety of the community and the economic survival of employees, families and communities.”

According to Mayer Brown, the pandemic, for all its disruptive impact, provides companies with an opportunity to engage in new ways and highlight the value case for compliance and ethics by applying: (i) strategic issue spotting to highlight changes in a company’s risk profile; (ii) tailored approaches to support the business through the emergency period; (iii) partnering in problem solving to mitigate pressure and promote conduct accountability; (iv) transparent and credible communication to bring perspective on consistent values and recognised challenges; and (v) often untapped sources of team knowledge, systems and vantage points that can advance both business and compliance objectives.

“The current environment of pressure and loss of perspective can act to exacerbate ethics and compliance risks throughout a company’s business model, from supply chain to sales and distribution,” says Audrey L Harris, a partner at Mayer Brown. “Compliance and ethics teams can best respond to these rapid changes by acknowledging that it is far from ‘business as usual’, issue spotting changes to risk profile, and finding ways to relive pressure while promoting conduct accountability.”

In the view of Emma Wollschlager Schwartz, president at Medical Center of the Americas Foundation, an effective ethics and compliance programme is based on the following seven interconnected founding elements. First, designating a compliance officer. Second, developing written standards of conduct and policies and procedures. Third, providing training and education. Fourth, promoting open and effective lines of communication. Fifth, enforcing compliance and ethics standards though disciplinary guidelines. Sixth, auditing and monitoring for compliance and ethics. Finally, responding appropriately to offences.

“Each compliance and ethics programme element creates, stems from and relies on the others to some degree,” explains Ms Schwartz. “When one element is lacking to any degree, the other elements will suffer. Each element has vulnerabilities – ‘breaking points’ – actions, or lack thereof, that render a basic element less effective or hinder it from achieving its goal.

While important across the board, in certain sectors, such as healthcare, adhering to robust compliance and ethics standards is literally a matter of life and death. Analysis by PreCheck – ‘Cultivating a Culture of Compliance and Ethics in a COVID-19 World’ – highlights the high-stakes complexity of healthcare ethics and compliance.

“In the face of supply shortages, healthcare organisations have been forced to make life-and-death decisions regarding who can receive complete care and who cannot,” observes Bryan Barajas, a director at PreCheck. “But when confronted with these incredibly difficult decisions, a strong culture of ethics and compliance provides guidance.”

Clearly, compliance in healthcare is a critical component of a healthcare organisation’s operations. Transparency is key, an approach made easier where healthcare organisation and compliance departments nurture a culture driven by compliance and ethical conduct.

“Healthcare compliance is complex, and the stakes for non-compliance are high,” continues Mr Barajas. “The best defence against non-compliance is a proactive, ethical culture. When policies support compliant conduct for everyone – and everyone understands how to implement those policies – then workers can live your organisational values every day. And if your people know how to act in accordance with your values, then you are not just ‘safe’ from non-compliance, you have created an ethical culture.”

Across, healthcare or otherwise, COVID-19, whatever its ultimate impact and duration, has reinforced the importance of ethics and compliance. They key message is that operating with a culture of integrity has never been more important.

“Ethical business decisions are important at all times but when facing a real public health crisis, ethical considerations provide important guideposts to facilitate effective decision making,” concludes Mr Volkov. “It is a very anxious time for everyone, and eventually we will look back on this time for better understanding of how we got here.”

© Financier Worldwide

BY

Fraser Tennant