Learning compliance risks

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Compliance, corporate governance and recent legislation are nothing new to executives who run the risk of exorbitant fines and even jail time for failing to conform to recent mandates. However, this same accountability is now making its way to the marketing department largely because of its sizeable budget and the enormous impact its actions have on both customers and shareholders alike. To avoid the most common risks, marketers need to understand where their vulnerabilities lie:

Racial bias. We've all seen it; the story that talks about how the Attorney General is investigating a company due to racially biased practices. More often, the culprit lies not in bad business practices but in the chaotic and random use of database marketing practices. Today, companies are forced to look seriously at marketing process re-engineering in order to protect the reputation of their organization and to avoid the financial risk associated with racial biases. As a result, companies are now looking beyond their existing marketing automation solutions in favor of newer technologies such as Marketing Operations Management (MOM) applications because they are capable of targeting potentially damaging racial biases.

Erroneous representation. Faced with shrinking product life cycles and rapid global rollouts, marketers have little time available to fully review and verify that the information communicated is consistent and accurate. As a result, very dangerous errors may occur.

Because the marketing function touches many different departments, cross-functional coordination and process implementation are significant and error-prone challenges. Any discrepancy or breakdown in the communications cycle can have severe and immediate consequences by eroding both the value and confidence in an organization's product or brand.

Marketing expense tracking and Sarbanes-Oxley. The recently enacted Sarbanes-Oxley Act requires that a company report on the effectiveness of its internal controls as they relate to its financial r eporting.

Enterprise marketing communication spending tends to be significant and often requires senior management to assess and make representations about the effectiveness of the procedures for financial reporting. Further, marketing is infamous for unplanned operating expenses as a result of evolving market conditions and competitive landscapes. As a result, many CMOs are requiring that marketers use technology that will allow them to tightly integrate financial reporting to marketing procedures.

Like it or not, marketers will forever play a role in an organization's ability to remain in corporate compliance. By understanding where the risk lies and by leveraging technology to institute checks and balances that monitor spending while promoting a corporate wide communications culture, they may find that the road to compliance is much easier than once thought.

Chetan Saiya is the founder and chairman-CEO of Assetlink. He can be reached at Chetan.[email protected].

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