An effective Compliance program not only includes a regular risk assessment, furthermore it is based on such. Only if the facts are known, including probability and potential impact, it can be decided how the relating Compliance program should be structured.
This sounds like logic and mathematics, but as everything what includes the human factor, this is not completely true. If an event with low probability happened to you, in the following you will overestimate its probability. The same the other way around, an individual who took risky decisions and achieved positive outcomes, will overestimate his or her ability to control the situation, also known as “illusion of control“.
This effect goes even further, persons who are not ready to take required actions are likely to deny obvious facts or avoid receiving such information. Common examples are the avoiding to step on scale, if you have the perception of over-weight, but not the psychological strength to start a diet.
Or you avoid to learn about the risk and impact of earthquakes, if you are living in a endangered area. Even if you know how to react in a smaller catastrophe, you feel helpless in the case of a strong earthquake. The human mind tries to avoid to accept facts, if on the other hand there is no realistic opportunity to avoid or even reduce the risk.
Driving in Formula One means taking on risks. Even if the sport became safer as, for example, in the 1970’s, its still dangerous and drivers could pay the ultimate price for their passion. A part of the risk could be reduced by intelligent driving and making the tracks safer, so even if the risk stays high, it is important to execute the risk assessment, or as Ferrari driver Sebastian Vettel said: “We can’t shut your eyes.”
This makes it clear that the role of the Compliance Officer is not only to be the organizer of the risk assessment, but guide the participating managers and other key-employees through the questions and risk-factors. If managers seem to over- or underestimate risk-factors, the CO, based on his or her experience, has the obligation to open their eyes to reality.
- Bernstein, Elisabeth (2017): “When You Need to Face Facts in Your Life”
- Henz, Patrick (2016): “Compliance is a Race Car.”