The consequences of global trade non-compliance are often taken as simply consisting of monetary fines, penalties, or sanctions assessed by foreign governments, and it is true that they are the most immediate and directly punitive results of infractions associated with international trade.
In reality however, the range of possible risks and consequences involved is much broader, and may have a more profound effect that impacts both commercial operations and overall financial performance.
“As company operation and holding continue to expand into all corners of the globe, decision makers too often pay too little attention to specific country risks and other matter of critical importance. Boards of directors are particularly vulnerable to this glaring oversight due mainly to a lack of direct insight into a particular country – which leads to an inability to discern fact from fiction – and not knowing the right questions to ask of corporate management.”
Daniel Wagner, CEO of Country Risk Solutions, a cross-border risk consulting firm based in Connecticut, Huffington Post columnist, and author of the new book Managing Country Risk.
Boards have a duty of care and face personal consequences for commercial or regulatory oversights. In cases where there is an egregious breach of fiduciary responsible for any resulting loss to the corporate shareholders or other principals, owing to their negligence.
A company’s brand and reputation have an intangible but significantly real value based on performance; i.e., the ability to reliably and consistently deliver on its promises. Public companies are routinely subject to detailed examination in the course of their periodic financial disclosures to regulators, but privately held firms are by no means exempt from critical scrutiny.
In the case of both public and private companies, at any time their reputations can be subjected to trial in the court of public opinion should things happen to go awry, whether that involves being pilloried in the mainstream press, or arguably worse these days, mercilessly excoriated on social media platforms.
Other posts in this series:
- The Intersection of Globalization and Corporate Leadership
- Corporate Leadership & Compliance: The Board of Directors’ Role (Part II)
- Corporate Leadership & Compliance: The Board of Directors’ Role (Part I)
- The Role of Corporate Leadership in Achieving Compliance Success
Click here to download the white paper.