Corporate Compliance Root Cause Analysis
Guidance on conducting Root Cause Analysis
The Department of Justice (DOJ), in its “Evaluation of Corporate Compliance Program Effectiveness”, emphasizes that a hallmark of an effective compliance program is conducting a thoughtful Root Cause Analysis (RCA) following identified misconduct, along with the timely implementation of remediation to address any identified weaknesses. RCA is viewed as a tool for identifying and addressing the underlying issues within corporate compliance programs and is a key consideration in DOJ evaluations of corporate compliance programs. RCA involves a systematic investigation aimed at determining the fundamental causes of a problem, rather than merely addressing its symptoms. Prosecutors assess whether companies have thoroughly analyzed the causes of misconduct, identified any systemic issues, and taken appropriate remedial actions. This includes evaluating whether the organization has updated its compliance program, disciplined responsible individuals, and implemented measures to prevent future violations. For Compliance Officers, it is important to ensure a structured process exists for identifying the underlying causes of compliance violations and related incidents, violations, issues, and problems. The following is a general approach to conducting RCAs:
- Define the Problem: Clearly define and describe the compliance incident, violation or issue. Determine what happened, when it started, and its impact.
- Collect Information: Gather information and data related to the problem, including documents, records, observations, and interviews with those involved.
- Identify Possible Causes: Consider potential causes of the problem by asking why it happened. Identify any system or process weaknesses that may have contributed to the issue. Determine if there are any patterns of recurring issues, and whether it could happen again.
- Analyze Causes: Evaluate the identified causes to determine which are most likely to be the root cause. This may involve questioning each contributing factor to assess its contribution to the problem.
- Implement Solutions: Once the root causes are identified, develop a remedial action plan to address them. This may involve changes to processes, training, or other interventions.
- Monitor Outcomes: After implementation, monitor the situation to see if the solutions effectively address the problem. Adjustments may be needed based on the results.
- Document the Process: Maintain a complete record of the RCA process, findings, and solutions to serve as a reference for addressing future issues and to support accountability.
By following these steps, organizations can effectively address problems and minimize the likelihood of recurrence. For more information on this topic, contact Richard Kusserow at [email protected].
