Think the cost of running an ethics and compliance program is high? Consider the possible alternative. The fines paid by companies last year for non-compliance hit the stratosphere: JPMorgan Chase doled out $5.1 billion related to mortgages and Johnson & Johnson paid $2.2 billion to settle fraud charges tied to its marketing.
Compliance can be a costly endeavor — with an ROI that can be difficult to measure. The average compliance tab — from hiring ethics and compliance professionals to investing in technology that can identify data breaches, is $3.5 million a year, according to The Ponemon Institute and Tripwire. That’s nothing compared to the estimated annual cost of non-compliance: $9.4 million, or 170 percent more.
Non-compliance costs are more than settlement fees. They come in the form of business disruptions, brand damage, reduced productivity, revenue loss and other legal fees. In the case of JPMorgan, the bank reports that the legal tab for one recent quarter alone was a shocking $7.2 billion, and CEO Jamie Dimon warned that litigation costs could continue to be a drag on earnings.
Rather than pay hefty sums in reaction to non-compliance, smart companies preemptively invest in compliance activities. They use data-driven ethics and compliance management programs that can measure ROI by tracking money saved in fraud and penalty prevention, documenting business process improvements, monitoring brand reputation and measuring productivity gains.
While there’s been a hiring spree for risk and compliance staff, newly minted CCOs face many choices when deciding how to prioritize their (often limited) compliance budgets.
Check out this infographic to see how companies in various industries spend — or withhold — their ethics and compliance dollars, and where they should focus future investments.
The post Infographic: Can Non-compliance Break the Bank? The Numbers Say It All appeared first on The Company Ethicist.
