The cost of a compliance failure can be significant. Costs may result directly from penalties, settlements, legal fees, increased insurance costs, and management and board distraction. They may also result from damage to corporate reputation with its potential impact on stock price, customer and employee retention, credit ratings and the cost of capital. For these reasons, oversight of the corporation’s tone at the top and the compliance programmes designed to establish and maintain that tone and detect problems is an important board responsibility.
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