Bain Capital, the global alternative asset manager, has operations and investments in markets all over the world. Melissa Obegi, Bain’s Asia General Counsel, is responsible for understanding and mitigating the firm’s regional risk profile—no small feat in a market that runs the gamut from Sydney to Shanghai to Bangkok. Seeking to help Bain’s portfolio companies meet rising local compliance expectations, she initiated a groundbreaking partnership with Ethisphere offering targeted workshops for portfolio companies, which helped the firm win the 2020 award for Most Innovative Strategic Risk program from Financial Times Innovative Lawyers Awards Asia-Pacific.
Bain Capital’s attitude towards its investment portfolio is distinctive for its hands-on approach, taking the principles of management consulting and actively partnering with companies who seek and would benefit from strategic input. For Obegi, that translates into a relationship with Bain’s portfolio companies that centers on aligning objectives, as opposed to “a more forensic or audit-driven, more oppositional approach” to risk and compliance. The workshops with Ethisphere allow Bain to provide ongoing, tailored support to company compliance teams.
One of the advantages of this consulting mindset is that Bain is able to consider investments that others looking for more passive engagements might consider too risky. “I do think we are able to work with companies that are less mature, but are willing to undertake a journey of progress,” says Obegi. The main requirement becomes a basic commitment to shared values.
So what exactly are these workshops trying to accomplish, and how have they developed and evolved over the years?
Start with the Biggest Challenges
The association between Bain and the Ethisphere team began in 2012, as Obegi was seeking a way to help assess and upskill Bain’s portfolio companies, most of which the firm has a controlling stake in. Since Bain’s investments in the Asia-Pacific region typically operate on medium-term, three- to seven-year timelines, the firm had every incentive to improve its portfolio companies’ risk controls and programs.
Obegi sought to assess the compliance maturity of portfolio companies, and then provide them a “supportive, practical, and constructive” partnership to help address any issues. Together, Ethisphere experts worked with Obegi to build a series of modules to assess and train their programs and personnel.
Despite the challenges, Bain and Ethisphere chose to first focus on tackling those companies with the very highest risk profiles, reasoning that if the workshop model worked on the toughest cases, it could be adapted for any risk level, geography, or maturity. One of the first workshops brought together China compliance officers, a relatively new role at the time, both for knowledge sharing and also to create an ongoing peer network. That first set of workshops proved a success—and provided a blueprint to build upon.
A Flexible Assessment & Workshop Model
After that, Bain worked with Ethisphere to construct a flexible format that has, over time, been adapted to the full breadth of the firm’s investments in Asia across all countries and risk levels. Companies begin with an online intake assessment analyzing their maturity along a variety of risks, topics, and practices. The assessment produces a maturity score, which arms both Bain’s team and company compliance professionals with insight into the program’s specific strengths and gaps to be addressed, which can be taken to other leaders.
From there, Bain and Ethisphere convene workshops using Ethisphere’s change management approach to define measurable compliance program improvement goals. Outside experts are brought in to address specialized topics of need across several portfolio companies. Identifying individual needs allows for flexibility, ensuring that appropriate workshops can also include companies with greater maturity or lower risk exposure. Over time, the topic areas covered have also expanded as companies graduate to more complex or advanced needs, and more mature companies are brought into the fold. One company might progress from advancing anti-corruption training, to third party due diligence, to confidential information protection practices—all using the same approach.
The workshops can be run for individual companies or groups of portfolio companies. Having different companies in the same room for workshops creates a sense of both camaraderie and competition. The approach ensures that companies can have collaborative and frank discussions, and also creates peer groups among attendees that can be nurtured, consulted, and leveraged after the workshop. It also ensures that companies set a high bar for themselves when setting goals and making commitments—after all, nobody wants to seem less ambitious than their peers.
One key to the workshops’ success has been the regular inclusion of cross-functional teams from each company. Having leaders from finance, procurement, or HR in the room legitimizes the role of the nascent compliance function, and occasionally has led to breakthrough moments. Personnel outside of compliance begin endorsing their work—for example, finance leaders recognize that compliance controls also reduce losses to theft, money laundering, supplier kickbacks, and other risks, ultimately boosting profits.
Obegi remembers one early workshop in particular. “Two-thirds of the way through a program, the CFO of one of our companies stood up and began emphatically talking about how, and I quote, ‘Bribery is not a sustainable competitive advantage.’ He was the CFO! The fact that this was coming from him and not the compliance folks was impactful. It wasn’t just us preaching—it was a dialogue.”
The Right Time in the Right Market
Obegi believes that this model developed in Bain’s Asia-Pacific portfolio in part due to the profound shifts in the region’s development and regulatory environment during her tenure. China’s economic rise has continued, as has major development in much of Southeast Asia. At the same time, anti-corruption became a political focus for many regional governments, including China, South Korea, and India. “It has been really interesting being in Asia over the past 15 years,” says Obegi, “because there’s been a lot of progress around the rules and norms that companies live by, and building a supportive framework to achieve that.”
The combination of global enforcement of anti-corruption laws by a few Western countries, particularly the US, combined with local initiatives in countries like China and India, “created tailwinds for the work we wanted to do as an American company operating to certain standards in these markets.”
As the program has gone on, new subject areas and modules have been added, expanding from compliance-oriented topics such as bribery and corruption controls to crossover areas such as trade secrets protection or cybersecurity. Obegi envisions that the next step will involve modules on “broader environmental and social risks, climate change risk, labor force risk.”
When asked why she believes the Financial Times chose to honor Bain’s work, Obegi points to the impact the model has had over the years. “The researchers recognized the unique nature of the program, and how we were able to reach so many companies and individuals,” she explains. “When we do workshops, we have key constituents from all departments. We’re not just training lawyers. It’s cross-functional with procurement, HR, finance, legal, compliance, and even top management.” By Bain’s estimate, the program has reached over 1,000 portfolio company personnel since its inception, with more being added every year.
From Ethisphere’s perspective, Bain and Obegi have proven ideal partners. As Ethisphere Executive Vice President Craig Moss says, “Our partnership with Melissa and Bain has been tremendous. From the beginning they had a commitment to embed compliance into the culture of how portfolio companies operate. They see the benefits of measuring current program maturity, and then providing guidance and support to help companies make rapid practical improvement to reduce risk.”
About the Expert:
Melissa Obegi is Asia General Counsel for Bain Capital, overseeing the Private Equity and Credit businesses. She joined the firm in 2012. Prior to joining Bain Capital, Ms. Obegi was a Managing Director with Oaktree’s Asia Principal Opportunities group and Asia Regional Counsel in Hong Kong, where her work focused on private equity investments in the Asia Pacific region. Ms. Obegi also has transactional experience in a broad range of emerging markets globally.