Holistic Risk Management Through Innovation & Diversity
The U.N. Office on Drugs and Crimes estimates that annual illicit proceeds total more than $2 trillion globally. Proceeds of crime generated in the United States were estimated to total approximately $300 billion in 2010 or about 2% of the overall U.S. economy. As history would remind us and amidst the COVID-19 pandemic, crisis creates extreme vulnerability to fraud and financial crime across our global financial systems.
The ExCo vs. The Status Quo brings together like-minded individuals and brands to illuminate the innovative actions companies are taking to make a bigger impact. This diverse community of industry leaders are building the conversation around what's working, what's not, and how to make things better - together - through a shared commitment to a common goal.
Enter Andrew McBride. Andrew is the Chief Compliance Officer at Albemarle Corporation, a global specialty chemicals company with over 6,000 employees that serves customers in approximately 75 countries. He's led companies around the world through complex compliance challenges and is one of the most creative and thoughtful compliance leaders, always asking the question, "How can we do this better?” Read Exiger’s chat on how Andrew and Albemarle are making the world a safer place to do business.
There are so many interconnected events happening as a result of Covid-19 - from the global geopolitical environment to market volatility - the risks of doing business are even more challenging. What is it about the ExCo vs. the Status Quo that made you and Albemarle want to get more involved now and what does ‘making the world a safer place to do business’ mean to you?
Andrew McBride, Chief Compliance Officer at Albemarle: Perhaps it’s worth answering the question in the context of why I joined Albemarle. For those of you who don't realize, there may be a bit of Albemarle in your pocket right now. Albemarle is the world's largest producer of lithium. It goes in your mobile phone batteries, in your EV cars; there's a fair chance that there's some Chilean or Australian lithium in there somewhere. So, for me, it was great to be joining a company supporting that EV revolution.
The company has been on a bit of a journey because we were a specialty chemicals company who became involved in mining. And that comes with a lot of responsibility, particularly in the sustainability area. It’s about the health, safety, and wellbeing of our employees, members of the community and our customers - whether it be in terms of product regulation or just the way in which we are running our operations – and environmental considerations such as how we use water.
This is where my team come in, the business ethics part of sustainability. Clearly corruption doesn't just have a financial impact, it can also have a very significant environmental, health and safety impact. If bribes are paid, then corners are cut, standards are reduced, and that can increase the risk to our employees and to citizens around the world. For me, it's all connected. And so that purpose of sustainability and what that means for us as a company is absolutely critical and the main reason that I joined Albemarle.
Having worked in the compliance field for over 20 years, how have you seen compliance change?
AM: Over the past 10 years, there has been increasing convergence between different areas of compliance such as corruption, sanctions, antitrust and market manipulation. An internal or external investigation can involve multiple areas of compliance. There is also much more coordination between enforcement agencies.
Think about what that means for program design? This is something that I'm really passionate about –– convergence of your compliance program, breaking down barriers between different areas of compliance so it becomes a more holistic program to manage risk.
Clearly corruption doesn’t just have a financial impact…if bribes are paid, then corners are cut, standards are reduced, and that can increase the risk to our employees and citizens around the world. For me, it’s all connected.
It's all so fast changing, right? How is Albemarle using technology today, or how have you seen the role of technology change while keeping up with regulatory requirements, expanding third party networks and globalization?
AM: I can remember when third risk management was paper based for many companies. This was replaced by proprietary third party risk management systems, because there were no vendors offering such platforms at that time. But proprietary systems were often inflexible, and at the mercy of your IT having capacity and budget to make changes. I think now, particularly in third party risk management, the buy versus build debate is over. There is no need to develop your own third party platform, and nor should you want to. It is better to rely on the flexible solutions offered by eth-tech companies.
I'd also say that the world of transaction monitoring and data analytics as a complement to reputational due diligence is incredibly important. The challenge now is gathering and assimilating all the significant data that I now have at my disposal within Albemarle, and processed by my eth-tech vendors. How do we get at that information? How do we analyze it? How do we visualize it? I have a data scientist on my team who has been helping me out with all of this.
More and more, we hear from regulators that now is the time to innovate. What are the right risks we should be taking, how should we evolve antiquated policies or technology stacks to more effectively manage all these risks? You mentioned technology, you mentioned a more holistic view to Albemarle's full risk exposure…what does innovation mean to you and how are you achieving that balance of the old way versus trying new, potentially better, methods?
AM: One of my slogans is to make things better. When we make things better, we're not simply focused on making our compliance program better, we're making our business processes better of which one part is ethics and compliance.
For example, there are huge opportunities to enhance how we engage with our employees. The traditional approach is to organize our policies & procedures and our code of conduct by area of law. From the employee's perspective, that's not helpful. In a former role I did some analysis on if you're a person engaging in procurement, how many policies do you actually have to look at to figure out what you need to do as part of you day job? And it was eight, and then five different sections of the code of conduct. That can't be right. This is not helping employees do the right thing.
At Albemarle I started asking “can we do it a different way?” It should be our responsibility – not our employees – to figure out what regulations we're subject to, what are the requirements, what are the controls, and then organize those requirements and controls by typical day-to-day employee activity and not by area of law.
So that’s what we did. We weaved in all of the functional, legal and compliance requirements into dedicated sections that served as a one-stop shop for employees undertaking any given activity such as sales, procurement or entertaining. Our Code then slots in right between our Core Values and the supporting functional policies that provide the detail.
Technology is also really, really important as an enabler of that engagement. To enhance the accessibility of the Code, we created an interactive version which basically means that wherever you are in the world, you can get access to the information on your work computer or mobile phone. So, I think that making things better but in the context of how people are doing their day job is key.
What keeps you up at night with respect to Albemarle's fight against corruption and financial crime?
AM: The legal and practical challenges of securing access to electronic communications. You are faced with multiple – and often conflicting – requirements to ensure that investigations are conducted thoroughly whilst respecting data privacy and labor laws – all in an environment where the form of communication is constantly evolving.
Can you share an example of another company you respect who's innovating to make the world a safer place to do business...and doing it well?
AM: I've actually got two. One in the compliance space and one broader:
- ABInBev in the compliance space, particularly on data analytics. What they are doing under Matt Galvin’s leadership is incredible. Using machine learning to a point where they will be able to undertake predictive analytics…that is really incredible. And to AB InBev’s credit, they've just announced that they want to share that technology through a consortium. So, they get the benefit of the algorithm learning from other companies. But the other companies get to benefit from the learnings that they went through.
- Outside of compliance, I follow the Ocean Cleanup company a lot. I just think that what they do is incredible. A Dutch teenager who is already tackling the great plastic garbage patch out in the Pacific has now developed specially adapted boats to go out into rivers and clear out the source of the problem, as well. That is truly making the world a better and safer place. And the best of it is that the stuff that they pick up is then recycled and sold into recycle products. From a core values and a sustainability point of view, you can’t get better than that.
You’ve named companies ‘walking the walk’…if there's one legacy you can leave behind in your career around making the world a safer place to do business, what does that look like?
AM: There is still a degree of siloed mentality thinking between different areas of compliance. At the end of the day, it is just about risk identification, assessment, management and monitoring. And the way in which you do that is agnostic - whether it's data privacy, corruption, fraud, money laundering, corruption, antitrust, the discipline of risk management is effectively the same. And so, we're exploring how to use technology to monitor how we engage directly with government officials, how we engage with competitors, how we participate in industry associations, because it's a very efficient and sustainable way for us to do that. And now, that bottom-up approach gives us very good objective data to feed into our broader enterprise risk assessment.
One of my slogans is to make things better. When we make things better, we're not making our client's program better, we're making our business processes better of which one part is ethics and compliance. There are huge opportunities to enhance how we engage with our employees. And technology is really, really important as an enabler of that engagement.
How important is diversity when building out great compliance programs?
AM: Massively important - I am proud that my team is extremely diverse both in terms of male/female ratio and also ethnic background. We are better for it. The diversity and strength of opinions, and the skill sets and the experience is powerful. And when we all get together for our fortnightly team call, I just sit back and hear them talking about a problem - the rigor of that discussion is a function of the diversity that we have. And it builds on the passion that the company has, as well. We have an initiative called Women's Connect to give a platform for women in the organization to really step up and take senior positions. And in fact, this very morning one of my team members has just put in her application to the Women's Connect Initiative, of which I'm obviously a big, big supporter.
When I'm looking at candidates, the experiences and the skillsets and the personal engagement is absolutely paramount. It's not about male/female, it's not about lawyer/non-lawyer, it's about who's the best person for Albemarle, and who's the best person for the role that we're recruiting for. And I think that we've done okay.
Rapid Fire Round with Andrew
- Favorite Place to Travel: Anywhere that's got good surf
- Favorite Food: My mom's British Sunday roast. I went back to the UK two weeks ago, it's the first time I had a Sunday roast, which for those... It's meat and Yorkshire pudding, and all the trimmings. There's just something about it.
- Favorite Show to Binge: Money Heist on Netflix
- Favorite Book: Freakonomics...and the Harry Potter series with my eight-year-old
- Favorite Band/Singer: U2
Join the Conversation
The fight against financial crime and corruption won't be won by one company, provider, government or bank