Podcast - The FTC's Interest in Governance Matters: Board Oversight, Compliance and Awareness

Anthony DiResta: Welcome to another podcast of Clearly Conspicuous. As we have noted in previous sessions, our goal in these podcasts is to make you succeed in this environment, make you aware of what's going on with the consumer protection agencies and give you practical tips for success. As always, it's a privilege to be with you.

Today we discuss governance.  Boards of directors increasingly face strong regulatory scrutiny for governance failures — not just operational mishaps, but systemic lapses in oversight. The Federal Trade Commission (FTC), as a key regulatory actor, has made clear that it expects effective board oversight of risk and compliance. I've seen this focus in recent investigations, folks! Again, I've seen this, and this issue is very real and very important.

This podcast explores the types of governance issues that concern the FTC and other governmental regulators, and what boards must do to fulfill their responsibilities. So let's now talk about the FTC's governance focus [and] the key themes.

FTC Focus on Governance: Four Key Themes

Theme 1: Data Security, Privacy and Cybersecurity Oversight

The FTC has emphasized that a strong data security program starts at the top. Board members must demonstrate leadership and accountability in data security, privacy and cyber risk oversight. Under the FTC's Safeguard Rule, a qualified individual must report at least annually to the board on the effectiveness [of] information security programs.

So therefore, boards should:

• understand the sensitive data held by the organization
• ensure written policies are implemented and tested
• insist on regular board‑level reporting on cybersecurity risks
• include directors with cybersecurity expertise

The FTC's focus stems from its consumer protection mandate to prevent unfair or deceptive practices, including data misuse and breaches. There's also antitrust and competition and board composition.

Theme 2: Antitrust, Competition and Board Composition

Both the FTC and the Department of Justice (DOJ) have revived enforcement against interlocking directorates under Section 8 of the Clayton Act, emphasizing the competitive risks of shared board membership among competitors.

So, the boards should:

• evaluate director appointments for antitrust risks
• require disclosure of overlapping board commitments
• monitor investor activism for potential competition issues

Theme 3: Compliance Systems and Risk Governance

Regulators now expect boards to actively oversee compliance — not merely approve policies but ensure that the systems function effectively. Boards and directors should assess whether compliance programs are well‑designed, properly staffed and regularly audited.

Boards should therefore:

• identify principal regulatory and operational risks
• demand regular reporting with measurable indicators
• ensure clear escalation procedures and documentation

Theme 4: Emerging Issues in AI, Algorithms and Transparency

The FTC is clearly turning its attention to AI and algorithmic accountability. Boards must oversee fairness, transparency and bias mitigation in automated decision‑making systems.

Therefore, boards should:

• understand how algorithms affect consumers
• ensure oversight processes for bias and transparency
• incorporate AI expertise or external advisors

Practical Steps for Compliance

So now let's get practical. Boards of directors, what should you know and do?

Boards must cultivate both awareness and action. Knowledge of the company's regulatory environment is essential, as is proactive oversight of compliance and governance systems.

Step 1: Knowledge and Awareness

You have got to:

• understand key FTC statutes, including deceptive practice and competition laws
• receive periodic reports on cybersecurity, compliance and risk metrics
• ensure board discussions and minutes reflect meaningful engagement

Step 2: Oversight and Action

• establish proper committee structures for compliance, risk and governance
• ensure adequate resources for management and compliance
• demand evidence of program implementation and testing
• document oversight in board minutes and reports

Step 3: Culture and Strategy

Governance is more than risk avoidance, it is strategic stewardship. Boards that embed ethics and compliance into their culture enhance long‑term resilience and stakeholder trust.

Step 4: A Practical Catalogue of Specific Governance Risks

• board interlocks and competitive overlap
• inadequate data privacy and cybersecurity oversight
• superficial compliance programs that lack testing
• poor incident response planning
• insufficient board expertise on emerging risks
• weak disclosure and reporting systems
• inadequate vendor and third‑party oversight
• cultural compliancy
• strategic decisions without regulatory foresight
• poor documentation of board oversight activities

Key Takeaway

So folks, I know that's a lot, but here's the key takeaway: The FTC expects active, informed and ethical governance. Boards' oversight of compliance, privacy and competition issues is a strategic imperative. The FTC expects proactive, engaged boards. Oversight of compliance and risk is essential for corporate integrity, and virtuous governance reflects leadership and stewardship.

Questions for Board Reflection

So, boiling it down, what are the questions for board reflection?

• What are our key regulatory risks?
• Do we have appropriate expertise and committee structures?
• Are our compliance systems well‑resourced and tested?
• How are board interlocked and monitored for antitrust exposure?
• Is our boards culture aligned with ethical governance?

Conclusion 

So here's the key takeaway, folks: Governance is not passive. It is an active expression of leadership, and under the FTC's watchful eye, boards must exemplify integrity, vigilance and prudence. In this sense, sound governance is both a legal necessity and an ethical calling.

So please stay tuned to further programs as we identify and address the key issues and developments and provide strategies for success. I wish you continued success and a meaningful day. Thank you.