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How Two Compliance Officers Tackled Risks Arising From the Coronavirus Pandemic

To tackle health-care needs during the coronavirus pandemic, companies have had to strike a balance between haste and prudence—an act that often requires the attention of compliance teams grappling with amplified risks and fewer resources.

“There’s a volume and a speed at which we’ve needed to respond to ensure that we [are] meeting the same standards and the same requirements that we would always, understanding the risk profile probably changes somewhat, knowing that you’re addressing a global health crisis,” Ashley Watson, Johnson & Johnson’s chief compliance officer, said Thursday at the WSJ Risk & Compliance Forum.

The New Brunswick, N.J., health-products company has been working with governments and other companies to try to find solutions to address the pandemic, such as developing a Covid-19 vaccine.

The effort has required the company to take on new suppliers and partners quickly while still conducting the necessary due diligence to ensure that they meet the company’s compliance expectations. “Just your ability to connect with them is tougher in a virtual environment,” Ms. Watson said.

More than half of the compliance professionals that responded to a recent Wall Street Journal survey said they experienced increases in new third-party risks as a result of Covid-19. Many of the respondents also said their relationships with third-parties have become harder during the pandemic.

Companies outside the health-care sector have had the added burden of learning the expectations of new regulators and hastily vetting unfamiliar suppliers to make pandemic-related products outside their typical processes.

Ashley Watson, Johnson & Johnson’s chief compliance officer.



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Johnson & Johnson

VF Corp.

, the Denver-based maker of Dickies work clothes and Vans sneakers, shifted production to make millions of medical gowns and hundreds of thousands of face masks. The effort required a new grasp of rules governing the manufacturing of protective equipment, understanding of how those rules change by jurisdiction, and investigating whether potential new suppliers will follow them, according to Kellye Gordon, the company’s vice president of ethics and compliance and legal operations.

Potential suppliers, perhaps out of a need to win a lucrative contract or maybe even survive, might be willing to skimp on compliance, increasing third-party risks, she said. “And so in terms of our ability to vet those suppliers, that actually became even more important with regards to quality assurance,” Ms. Gordon said during a Forum panel.

There are also supply chain, export and even antitrust considerations Ms. Gordon’s team has had to manage when collaborating with certain partners on new production lines. “You’ve got to think about sharing competitive information and making sure that you are removing all the risks related to pricing and confidentiality,” she said. The company has sought to mitigate those risks through additional training.

Kellye Gordon, vice president of ethics and compliance and legal operations at VF Corp.



Photo:

VF Corp.

Companies have also had to manage risks not just with selling pandemic-focused products,