What We Can Learn from Compliance Failures During the Pandemic

by Francine Breckenridge, Chief Compliance Officer, U.S. Money Reserve

For businesses, a fatal error (like those listed in the article below) can cost a company their reputation and, by extension, their business as a whole.

COVID-19 has upended everything from how we teach our kids to whether or not we commute to work. Here are the lessons compliance leaders need to take to heart as we move forward.

COVID-19 and the global pandemic has altered the world. Changing everything from the way we interact with one another to how we teach our kids, the virus has had wide-ranging and continuing effects on everything from our businesses to our home life. With the recent astronomical surge in case numbers, the virus doesn’t seem to be done teaching us lessons, especially if you work in the compliance function of your business.

At the outset of the pandemic, numerous very public failures happened, which means that company leaders had plenty of opportunities to learn more. Here are three failures and the lessons that business leaders need to consider as we continue to manage and deal with this ongoing pandemic.

Moving too Slowly in the Face of Facts

Early on in the pandemic, cruise ships spectacularly failed to protect passengers from the growing pandemic. In March, despite knowledge of infections on board, Carnival Cruise Line did not take action to stop the spread of the virus, which eventually infected more the 700 people aboard the Diamond Princess, according to Bloomberg. Corporate leaders were quick to blame the government instead of their own disregard for human health and safety. More than 1,500 people were infected, and dozens have died as a result of their exposure on the cruise ship.

The Miami Herald also ran a story reporting that more than 2,700 passengers who disembarked from cruise ships in Miami were infected with the virus. Consequently, those infected passengers took COVID home to their loved ones and their community.

What We Can Learn

While cruise companies argue that they were following governmental regulations, history will not judge them by whether they crossed their Ts. History and the public will judge them for how many deaths they caused with their actions or lack thereof.

This was such a colossal failure by cruise companies that Compliance Week is updating their work on a case study about lessons leaders can learn from the events that have plagued the cruise industry. It will be interesting to follow once they release the study and see what we can all do to prevent such a terrible misstep in our own companies.

Failing to Comply with Shutdown Orders

As businesses are once again being forced to shut down all over the country as a direct result of the current surge of more than 16 million cases of COVID-19 across the nation, an increasing number are beginning to rebel against the shutdown orders.

In California, for example, restaurant owners are ignoring orders to close outdoor dining with the help of various municipalities (like Manhattan Beach, an extremely wealthy beach enclave, and Solvang, a tourist town on the central coast). In Manhattan Beach, the city has “repurposed” outdoor seating areas as “public seating areas.” This is largely in direct opposition to the outdoor dining closure orders issued by Governor Newsom and LA County health officials in early December. These areas are used as places for people to sit and eat food that they have carried out from nearby restaurants, according to local papers like the Los Angeles Times and the Daily Breeze.

In Solvang, the city openly refused to shut down the town for the holiday season since the location relies heavily on tourists during Christmas. According to this story in SFGATE, the city argued that they didn’t need to shut down because their hospital ICU capacity was still well below critical levels.

In addition to municipalities refusing to comply, a rash of businesses are doing the same. Restaurants and bars all over the country have made headlines because of huge indoor gatherings that were eventually shut down by the health department. Many have had their licenses revoked and been forced to shut down long-term because of their violations.

So far, LA County has not cracked down on the violations, but the move puts thousands of people at risk since, as both stories note, people are traveling from other parts of the city to partake in the outdoor dining and activities loophole. Both cities risk significant fines from the State of California, as well as potential lawsuits by visitors, while the restaurants risk possible permanent shutdown should they continue to flout the rules. They argue that keeping many small businesses open and operating during these tough times is just as vital as keeping people safe from getting sick.

What We Can Learn

As we get deeper into this pandemic, we are all going to start facing serious stay-home fatigue. If the deadly virus hasn’t immediately impacted you or your loved ones, it’s likely that you will be more nonchalant about the restrictions and severity of COVID-19. In fact, that’s simple human psychology.

That means compliance officers and leaders must be intensely rigorous in their efforts to protect their customers and their employees. The ethical questions of whether or not you should risk your employees’ health and your customers’ health are questions that each compliance manager will need to address individually based on their company, their local restrictions, and the risk to their business’s economic security and future. The lesson here is to weigh your options very carefully.

Failing to Plan for the Worst

If one thing has become abundantly clear during the pandemic, it’s how woefully underprepared the U.S. has been for the global pandemic. The PPE shortage that continues to plague the country is a prime example of this. Early on, states like Massachusetts were forced to rely on private companies and people to fly PPE from China. While it may not garner headlines like it used to, the PPE shortage continues, thanks in large part to the federal government failing to stockpile the necessary items and because it failed to give the right governmental body the authority to manage the supply chain more holistically. As this story in Harvard Business Review points out, the Strategic National Stockpile (SNS), which George W. Bush created, was not built to handle a pandemic of this magnitude, and it severely lacks teeth when it comes to authority and enforcement. That results in various behaviors like stockpile hoarding and secrecy on the part of hospitals for fear of their PPE being taken away. That, in turn, creates even more of a shortage. Until something is done about or by the SNS, however, the PPE shortages are likely to continue.

What We Can Learn

Again, while this is a government-based example, there are lessons to learn for business leaders, too. This continued failure points out how vital disaster planning and contingency planning is today. It also points out just how important it is for compliance leaders to continually reevaluate their plans to adjust to whatever crisis may come down the pike.

As I have written before, the lessons of the pandemic continue to reveal themselves to those savvy enough to pay attention. At the core of these lessons is the importance of planning. Whether we’re figuring out ways to help make working from home a bit more secure or making sure that our employees are safe and secure when they do have to come into the office during these strange days, it’s vital that the c-suite at every company have a backup plan for how to cope in the case of a worldwide, nationwide, or even local business disruption.

The Bottom Line

As the world continues to wade through the murky, often difficult-to-navigate waters of the pandemic, the bottom line is that compliance leaders need to operate with transparency, a solid set of ethics, and clear guidelines from both internal and external partners. Without the help and support of governmental bodies, our workers, and our company leaders, we all risk becoming a bullet point on a list of the worst failures of the COVID-19 pandemic. No good people want that on their consciences. For businesses, a fatal error like those listed above can cost a company their reputation and, by extension, their business as a whole. By learning and acting on the lessons of those who have gone before and made missteps, compliance leaders can better prepare themselves, their team, and their businesses for the coming changes that are sure to completely upend the way we conduct business. If you want to keep your head above water and keep your business in the black, it’s best to continually take these lessons to heart and be sure that you’re making the very best, most ethical decisions you can to help keep your employees, customers, and future business safe.




America’s Gold Authority https://www.bbb.org/us/tx/austin/profile/coin-dealers/us-money-reserve-inc-0825-52264

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U.S. Money Reserve

U.S. Money Reserve

America’s Gold Authority https://www.bbb.org/us/tx/austin/profile/coin-dealers/us-money-reserve-inc-0825-52264

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