Sometimes it takes something bad to instigate something good. A hard lesson — a scandal, a breach, a product failure — can make us look at a problem head-on and ask ourselves how to fix it. More often than not, we knew the problem was there but didn’t act. For example: In 1938, the SEC discovered that pharmaceutical firm McKesson & Robbins had made up the 2020 equivalent of more than $300 million in inventory and receivables. Although it was among the most brazen scams of its era, the McKesson & Robbins saga followed numerous schemes of accounting fraud during the Great Depression. In response to them, Congress passed the Investment Company Act of 1940, which recommended that companies form audit committees on their boards to oversee financial reporting and disclosure — a safeguard that later became a requirement. The mandate was clear: Corporate boards must oversee the accounting function to ensure reliable financial reporting, thus protecting free markets and guarding the corporation against bad internal actors and blind spots.
Your Board Needs a Data-Integrity Committee
Don’t wait for a scandal to spur reform.
October 21, 2020
Summary.
It usually takes a scandal to spur reform. Companies are slow to address vulnerabilities until, at last, it’s too late. Today, most companies are failing to take data security seriously, and will likely pay the price — through both missed opportunities and embarrassing, costly breaches. Proactive companies should create a Data Integrity Committee on their board, following these three principles: 1) data integrity requires a cross-functional team, 2) data handling practices need to be company-wide, and 3) the Data Integrity Committee’s responsibilities should reinforce the company’s strategic goals.
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Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Digital Intelligence . Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
Excel in a world that's being continually transformed by technology.