Unfortunately, the story of companies paying the price for unmanaged meetings and events programs continues to be all too common. Companies are failing to control and oversee the planning process — unknowingly exposing themselves to a slew of potentially devastating risks. In the next few issues, I will shed some light on this sticky subject (and potentially help save you and your company thousands of dollars). Part one of this three-part series will explore the area of regulatory meetings-related risks. I’ll touch on how you can identify these types of risks, and ultimately prevent them with best practices, policies and processes.
Putting Regulatory Risk Under The Microscope
When the global economic recession reared its ugly head and caused companies to tighten their purse strings, a spotlight was cast on the meetings and events industry. It began with public scorn around bailout money financial companies received from what was seen as extravagant and unmanaged spending for
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Kevin Iwamoto,
GLP |
meetings and events. This led both legal and private entities to enact regulations on spending, expenses and gift exchanges.
Some of the major regulatory issues that planners now have to take into consideration include:
Sarbanes-Oxley (SOX): The federal government enforced these regulations in 2002, and while they are not necessarily specific to meetings, they do require a bidding process and documentation when hiring any type of third-party supplier for a company’s business functions. Therefore, SOX is a serious consideration for meeting planners, especially because it requires documentation of why a specific supplier was chosen.
Troubled Asset Relief Program (TARP): TARP is a relatively recent enforcement that targets companies taking government bailout monies. Specifically, TARP tags meetings and events as items that are potentially “excessive and luxury expenditures” and requires companies who took TARP money to publish an excessive and luxury policy on their Web site. Such companies must also create and follow a defined approval process for any expenditure in question.
Financial Industry Regulation Authority (FINRA): This is a private corporation that advises the Securities and Exchange Commission (SEC) and governs the financial industry. In addition, planners need to think about the actions of state governments that create rules for such publicly regulated industries as pharmaceutical and finance, as well as member associations that are dedicated to maintaining ethical practices. Not only do
| It’s important to remember that risk mitigation requires overcoming the typical human tendency to resist change. |
these bodies set regulations, they also can enforce penalties when companies do not adhere to the rules.
Sunshine Act: This legislation applies to companies with more than $100 million in annual revenue and requires drug companies and medical device manufacturers to disclose details about anything of value given to physicians, such as gifts, payments, etc., to the Secretary of Health and Human Services on a quarterly basis. This bill affects our industry in particular, as meetings and events are, by far, the largest type of health-care provider-attributable spend, and the bill will affect how health-care providers report their meetings spend to comply with new HCP reporting rules.
The next step is to describe the tactics used to avoid risk. The three important areas to help get your meetings under control are:
These best practices are essential to follow if planners and companies want to eliminate regulatory risk from their planning process. Enforcing these policies will provide more visibility and awareness across the entire meetings process, and preserve your company’s brand image.
It’s important to remember that risk mitigation requires overcoming the typical human tendency to resist change. Communicate to your company the potential dangers involved if the corporation is exposed to risk, train users on new tools and processes, and create consequences for non-compliance. Mitigating meetings risk is not always easy — but with company support it will go a lot smoother.
Next time, we’ll show how to identify and mitigate contractual risks, one of the trickiest parts of meeting planning, and what to do in the case of security or safety risks. C&IT