We all recognize risks, consciously and unconsciously. We are careful near cliffs or driving at high speed; we watch our diet and we manage our investments. We look out for our kids before – and sometimes after – they know how to care for themselves. We understand and manage risks in virtually all aspects of our lives by staying on the prudent side of our various risk perimeters.
The same is true in business. The nature of the risks are different, depending on your role in the company, but there are a wide variety of events that can put your business in jeopardy. Fire, theft, falling sales, rising costs, changing markets, aggressive competitors—all these are obvious. Not easy but at least apparent.
Compliance risks are not always evident or easily understood but, make no mistake, they can be damaging to your company. Export control compliance is a good example. This category of compliance provides plenty of cautionary tales involving companies and individuals who have suffered crippling penalties, fines and negative publicity for violating export control regulations.
While some knowingly and deliberately skirted the regulations, many more got in trouble out of ignorance, laziness, or both. They either didn’t understand the law well enough to recognize and rectify export compliance risks or they were insufficiently motivated to take the necessary precautions. Neither reason is prudent or defensible.
The “compliance risk perimeter” is a simple concept that is diversely useful in this context. Once executives and employees understand the concepts of export controls, they learn to recognize a risk before it becomes a violation. In the industry, these risks are referred to as “red flag scenarios.” If you encounter one or even if you’re not sure, stop and ask someone with more experience in export control compliance. If in doubt, check it out.