14 June 2004

Can Innovation and Compliance Be Balanced?

Can Innovation and Compliance Be Balanced?

The SIA Technology Management Conference and Exhibit this year is themed 'Balancing Innovation With Compliance.' But can innovation and compliance co-exist? Can we really think, develop and perform within the bounds of regulatory compliance in a period of rapid growth? Will we learn from the challenges of the late '90s and early '00s, pay penance, make amends and move forward on the straight and narrow?

Alternatively, are compliance and innovation mutually exclusive? They may well be, as the mid-80's boom gave us Milken and Boeskey and the late-90's boom gave us ... well, too many to count.

Traditionally, scandal fallout has been limited -- we throw folks in jail and change a few laws, but when market composure is regained, we seem to forget about previous transgressions and transgress anew. So, are we predetermined to repeat the past?

This time things look different. The settlement cost, the industry governance structure, the problem's magnitude -- and the focus on enforcement, litigation and legislation -- demand it.

The cost of problems and penalties this time has been huge. While the Milken settlement was $1 billion, today's legal challenges are costing firms far more. The research scandal alone cost $1.4 billion, while the Citigroup/WorldCom settlement last month drew $2.6 billion -- and these are only two of the numerous recent settlements."

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