The Role of Policies to Govern & Manage the Risk of Insider Trading

How is your organization reducing the risk of insider trading? Policies today are increasingly playing a critical role to help the organization govern and manage risk from insider trading.

Organizations need to develop and implement such policies to help identify and prevent any potential unlawful trading by directors, executives, and employees. Policies help the organization minimize the likelihood that insider trading will occur and give organizations a defense against insider liability for the actions of their employees.

As a result, it is paramount for your organization to ensure that:

  • Insider trading policies are current and relevant to manage Insider trading risk and meet compliance requirements
  • That employees properly acknowledge, understand, and are trained on insider trading policies
  • That policies are kept current as the business and insider trading risk and requirements change.
  • This all means an improved culture of insider trading compliance and reduced risk exposure.

These policies typically provide employees with rules regarding open trading windows, that such trading is prohibited during pre-established blackout periods, and much more. The Policy Management Capability Model is an effective resource to leverage policies to protect your organization against the threat of insider trading. A well-documented set of policies and training helps the organization to prevent unlawful trading, compliance violations, and reduces management time and effort.


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