Socrates in the C-suite: The need for Socratic dialogue in corporate compliance

Jonathan J. Rusch

Journal of Financial Compliance, 2018, vol. 2, issue 2, 176-183

Abstract: This paper discusses the need for compliance officers to demonstrate that their companies’ compliance policies and procedures are operationalised and defensible in the face of audit or regulatory scrutiny. To do so, they must begin by asking questions about each major element of their compliance programmes. To ask questions in the right way, this paper advocates that they use Socratic dialogue: asking a question, using the answer to formulate another question, and systematically continuing the process of questioning and cross-questioning to explore a topic thoroughly. The general structure of complianceoriented Socratic dialogue should be built around four questions: (1) ‘What are the purpose and intent that the government has stated for this programme requirement?’; (2) ‘What, specifically, have we done to satisfy this programme requirement?’; (3) ‘How will we prove and document what we have done?’; and (4) ‘How do those facts help in demonstrating the effectiveness of our programme?’ The paper then uses examples of specific Socratic-dialogue questions with regard to three hallmarks of effective corporatecompliance programmes — ‘tone at the top’; sufficiency of compliance resources; and examining risk assessment — to show how such questioning can foster improved corporate compliance. For ‘tone from the top,’ the questions reflect law enforcement expectations that leaders engage in concrete, specific actions to demonstrate compliance leadership. For adequacy of resources, the questions reflect the need for specific answers about staffing levels, staff expertise and training, and how corporate decisions about resources are made. For risk assessment, the questions reflect the need to have specific information about the company’s specific compliance risks, the methodologies it uses for risk assessment, and whether risk-assessment data is timely delivered to the right decision makers. The paper concludes that Socratic dialogue can be not merely useful, but necessary, in seeing that a corporate-compliance programme is well-designed and effective.

Keywords: Socratic dialogue; paper programmes; tone at the top; resources; risk assessment; effectiveness; concrete (search for similar items in EconPapers)
JEL-codes: E5 G2 K2 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jfc000:y:2018:v:2:i:2:p:176-183

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