Archive for October, 2012

Intangible Asset Business Valuations…

October 23rd, 2012. Published under Intangible Asset Value. No Comments.

 Michael D. Moberly    October 23, 2012

In the coming week, I will engage in business travel to a major city with an SMSA population well north of 4 million.  Even though my business meeting card is already full, as usual I will make a concerted effort to identify firms and strategists in the area who, based on language I find in their website, convey a shared interest in safeguarding and monitoring the stability, sustainability, and value of their clients’ intangible assets vs. merely conducting, what I frustratingly describe as subjective glimpses and/or ‘snap-shots-in-time’ (business) valuations.

My rationale is, unless and until the legitimate originators and/or holders of intangible assets recognize the importance of, and possess the interest and where-with-all to, sustain control, use, ownership, and monitor the value and materiality of their (key) intangible assets, all else may be for naught, because asset value can ‘quickly go to zero’!

In this context, I am often amazed with individuals and/or companies that seek business – intangible asset valuation services, that exhibit – express little or no appreciation for the business reality that most intangibles are routinely and persistently vulnerable to – targets of an array of asymmetric global threats and risks, not the least of which are misappropriation and infringement.  When such risks-threats materialize, they can produce almost instantaneous (value, competitive advantage) loss, erosion, dilution, and undermining, etc.  In other words, if one can’t consistently practice effective (intangible) asset oversight, it’s no longer proper to characterize asset risks – threats as probabilities, rather inevitabilities!

Of course, an unknown percentage of these risks – threats are attributed to accidental or inadvertent acts or behaviors, largely by employees or contractors, while others, most in my view, are products of specific acts/events emanating from a growing global cadre of ultra-sophisticated and predatorial ‘legacy free’ players who consistently and effectively target, not necessarily a company’s intellectual properties, rather its knowhow, i.e., intellectual, relationship, and structural capital, which are, in my judgment, are the most consistent and substantive contributors to a company’s value, its sources of revenue, and ‘building blocks’ for (future) growth, sustainability, and profitability!

Again, most business (intangible asset) valuations are subjective glimpses and/or snap-shots-in-time.  Unless and until the holders of intangibles can demonstrate they have effective practices, procedures, and culture in place to sustain control, use, ownership, and monitor their assets’ value and materiality, little else matters in my view.  Arguably then, business valuations will remain mere ‘snap shots’ that prospective buyers should give less credence unless, that is, they are satisfied asset stability, durability, sustainability, resilience, and longevity have been properly factored.

Should this level of awareness and understanding rise to being periodic, if not consistent agenda items in management team  – c-suite (board room) meetings, we’ll know something good and right has occurred!

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance. And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

Reputation Risk Fast Track..!

October 22nd, 2012. Published under Reputation risk.. No Comments.

Michael D. Moberly   October 22, 2012

I recently had a very stimulating conversation with Dr. Nir Kossovsky, President and CEO of Steel City Re in which we discussed a range of issues related to reputation risk.  Admittedly, our discussion merely scratched the surface of Dr. Kossovsky’s expertise in diagnosing, dissecting, and mitigating a company reputation risks.

Kossovsky’s firm (Steel City Re), whether by design is not just another ‘we’ll try to fix the mess a company has created’, i.e., through a conventional public relations lens and actions which invariably try to put a favorable and sometimes repentant spin (through primarily media tools) on even the most egregious events, acts, and/or or behaviors.  Instead, Kossovsky applies a combination of hard-to-dispute metrics, common sense, and revealing due diligence to proactively and effectively guide clients to reduce the probability a reputation risk event will occur in the first place.

My discussion with Kossovsky largely focused on how (company) reputation risk in many instances can be summed up with a single word; expectations, i.e., the expectations we (consumers, stakeholders, etc.) hold for a specific company or an entire (industry) sector and the products and/or services it produces, i.e., makes available to consumers.

It’s quite easy to use the commercial (U.S) airlines industry as an example of how many of our ‘expectations’ related to airline functionality and travel have appreciably declined, in recent years, at least in my view.  For example when I return from a business trip that involved utilizing commercial air transportation, I am often greeted with the clichéd question, ‘how was your flight’?  Today, and for many years, my response to that question is consistently framed in some variation of the following, i.e.; ‘I arrived where I intended to go and returned from where I went and still have my carry on’!

What’s more, my expectations have become even further minimized by suggesting  I want the commercial aircraft I fly to remain structurally intact and competently piloted and get me from my departure point to my destination and back in a time frame that reasonably resembles what’s printed on my ticket.

Unfortunately, I have few other expectations which I suspect I am not the only commercial flyer who holds such views, barring of course, those who pay five times as much to fly comfortably in wider seats, arrive refreshed, having dosed well, and having the option of consuming real food and an assortment of beverages throughout their flight.

A reality about economy class commercial air travelers like me, for long distances, there are no options, i.e., bus, rail, and automobile, unless of course one’s time ‘on the road’ is irrelevant.  This well understood economic fact would seemingly give rise to higher levels of tolerance to the dwindling number of commercial air providers that is somewhat different from retail sectors where consumers play more direct and immediate roles with ‘x’ times for results compared to the more imperturbable commercial air industry about remediating particular reputational risks, with the exception of course, major catastrophes or rows of seats suddenly coming unhinged.

A time-honored, but still very relevant perspective regarding a company’s reputation, be it commercial air carriers, or other industries,  is attributed to various individuals, including Warren Buffet…

 …it used to take years of consistent mismanagement, calamities, and/or neglect to destroy a company…today a company, and sometimes its entire sector, can commence a substantial downward (reputation risk) spiral rapidly, if not instantaneously…

But, company reputation degradation is not exclusively due to the ever expanding range of persistent, asymmetric, and global risks, threats, and hazards.  Rather, reputation demise is often linked to the speed which unchecked, dismissed, or overlooked risks, etc., can actually materialize, escalate, and cascade throughout an enterprise and reach consumers and stakeholders alike! (Adapted by Michael D. Moberly from remarks of Sir John Bond, Chairman of UK based HSBC)

In my view, reputation risks are somewhat akin to the following statement attributed to Jack Welch which I have adapted, i.e., “…an idea is not necessarily a biotech idea, that’s the wrong view of what an idea is.  An idea is an error-free billing system or it’s taking a process that used to require six days to do and getting it done in one day.  Companies, Welch claims, can routinely obtain productivity increases if they have the means and culture whereby potential ‘good idea contributors’ can come forward with their ideas percolating to the top…”.

In other words, and quite unfortunately, some ideas, we know, a certain, but unknown percentage, will routinely go unrecognized, un-or under-valued, and ultimately be unceremoniously dismissed, never seeing the ‘light of day’ other than in the mind of the originator through a sense of personal and/or professional pride.

Being no novice to this arena, I am hard pressed to believe that many, if not most (reputational) risks, threats, and/or subpar practices and procedures do not always constitute sudden revelations or events.  But, company, or worse, in my view, an entire sector’s reputation can be aggravated, if not experience a substantial ‘nose dive’ that rapidly rises to the level of (national, international) calamity, when it becomes pessimistically embedded, as newly acquired consumer expectation.

The lapses found in a single pharmaceutical compounding firm recently is surely a representative example of putting hundreds if not thousands of patients at risk of contracting, extraordinary and sometime irreversible diseases.  Admittedly, I, and I supect a significant percentage of consumers had little, if any prior knowledge of drug compounding centers, which now has manifested as a national crisis and by virtue of it being linked to the deaths of numerous, and no doubt more patients.

According to the Professional Compounding Centers of America, presumably a professional association, compounding is described as ‘the art and science of preparing personalized medications for patients, whereby compounded medications are made from scratch, individual ingredients are mixed together in the exact strength and dosage form required by a patient. This method allows the compounding pharmacist to work with the patient and the prescriber to customize a medication to meet the patient’s specific needs’.

Again, according to the PCCA website, at one time, nearly all prescriptions were compounded, but, with the advent of mass drug manufacturing in the 1950s and ‘60s, compounding rapidly declined. The pharmacist’s role as a preparer of medications quickly changed to that of a dispenser of manufactured dosage forms, and most pharmacists no longer were trained to compound medications. However, the “one-size-fits-all” nature of many mass-produced medications meant that some patients’ needs were not being met, but as modern technology and innovative techniques and research have allowed more pharmacists to customize medications to meet specific patient needs.

With the NECC representing a most poor and unfortunate example of the manifestation of a ‘full blown’ reputational risk, is the highly likely probability that some unknown number of NECC employees (individually) were, politely stated, in various ways, collaborators in the materialization of this substantial and in all likelihood, irreversible reputation risk.  Which is my point, company reputation risk prevention and/or mitigation is often times about individual acts and behaviors, and not just those emanating from the c-suite.

Readers, this is a clear example of not just a single compounding firms’ reputational risk, but reputational risk that have clearly cascaded throughout this relatively non-descript sector.  I’m quite confident the PCCA has developed, as most professional associations have, specific standards and guidelines describing the proverbial minimums of operation.   But, I’m equally confident, even though admittedly, I have not examined these particular standards closely, if experience is a reasonable preditors, they do not include a context of reputation risk.  It is surely not the PCCA’s role to police the many independent member compounding facilities operating in the U.S.

I do hold the view however, that the compounding firms’ which have not been linked to the current problem, are now on the reputation risk mitigation fast track!

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance. And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

Prosecuting Intangible Asset Losses…

October 18th, 2012. Published under Insider Theft of IP and Intangible Assets, Intangible asset strategy, Intangible asset training for management teams.. No Comments.

Michael D. Moberly    October 18, 2012

This post represents  an issue every CSO, CIPO, CISO, CTO, CRO, and corporate legal counsel should, if they haven’t already, fully consider.  Having taught in a university criminology department for 20 years, it’s less than rocket science to know that theft – stealing of property have conventionally been taught (interpreted) to involve some manner of misappropriation of ‘things’ i.e., real, tangible, physical property.

However, an intriguing question was posed by Stuart Green, a Rutgers law professor, in a NYT’s (March 28, 2012) piece, one which many of us have thought about. Basically, he asks, at least in my interpretation, whether the terms theft and/or stealing fit today’s circumstances, particularly when the assets stolen or misappropriated, are likely to be intangible, i.e., non-physical in nature?

Respectfully, I presume some readers of this blog and certainly my colleagues in the security – asset protection profession, find such a question unnecessary or perhaps worse, opening an unwanted and ill-timed ‘can of legal worms’.

For most prosecutors, and obviously the music and movie industries, it’s quite easy to assume they prefer, and are quite willing to devote the necessary resources to ensure the relevant institutions continue to apply the terms theft, stealing, and misappropriation using conventional and time-honored language that essentially does not distinguish tangible from intangible assets.

Conventionally (and intuitively) speaking, an act of stealing and/or theft have traditionally been interpreted as when either an individual or entity acquires (takes) property belonging to another, without their permission with the intent to permanently deprive the rightful owner of said property.  Or, what Green and others characterize as a ‘zero sum game’, that is, one party loses an asset (property) rightfully belonging to them, while another party gains that asset or property. Bottom of Form

However, in the current knowledge – intangible asset-based global (transaction) economy in which, conservatively speaking, 65+% of most company’s value, sources of revenue, ‘building blocks’ for future growth, sustainability, and profitability lie in – evolve directly from intangible assets, it does beg the legal question; are those conventional, time-honored definitions about theft – stealing relevant to intangible (non-physical) assets?

To add complexity, but, perhaps reality, to this position, again, in the context of the permanence of the knowledge – intangible asset based business economy, in some sense, as Professor Green suggests, when particular types/categories of intangibles are stolen, the rightful owner is likely to retain some or perhaps even complete use of those assets, albeit perhaps in a depreciated and/or undermined form insofar as reduced value and sources of revenue had those (music, video-based) assets not been illegally downloaded, because had they remained intact, they presumably could have delivered additional sources of revenue.

The reality is, as readers of this blog know well, we (companies) are producing, acquiring, and, inventing significantly fewer tangible things or assets in lieu of assets which are more likely to be intangible and non-physical.  So how does this very real circumstance mesh with the conventional perspective of prosecutorial ‘zero sum gain’ relative to (asset, property) theft and stealing?

Various courts and legislative bodies have periodically adjusted some of the conventional theft, stealing, misappropriation laws (language) according to Green.  Presumably that’s done to try to accommodate an economy and more business and personal possessions that are intangible (non-physical) in nature. Thus, has the time come, as Green posits, for specialized (presumably) legal doctrines to be developed to specifically reflec the (theft, stealing) misappropriation of intangible assets?

In the mid-1960’s, some criminal law reformers became frustrated with how courts and legal practitioners were endeavoring to distinguish tangible and intangible property.  One outcome of this frustration was that the American Law Institute developed a ‘model penal code’ which essentially defined property as constituting ‘anything of value.’  Personally, I remain unconvinced this was the most appropriate way to handle this.  Admittedly however, in 1962, intangible (non-physical) assets were hardly in mainstream business or legal vocabulary.

Presumably then, when-if tangible, intangible, real, or personal property succumbs to theft and/or misappropriation, they would be treated uniformly.

On a relevant note, a trust and estate attorney I met recently was asked about how she intended to address intangible assets her clients had accumulated when she was drafting their respective trusts, wills, or estate documents.  This particular attorney expressed virtually no interest, nor seemingly a clue about how to identify, unravel and value, or incorporate intangible assets in a will or trust other than to characterize it merely as an issue for an accountant to untangle.  Her stated preference was to consult with an accountant only – primarily for asset valuation purposes and accept whatever the accountant reported.  In my view, this perspective prompted me to wonder if this attorney was indeed operating in the 21st century?  She certainly, had not read any of my blog posts!

Today, of course, intangible asset intensive – driven businesses have sprouted globally, brimming full of intellectual, relationship, and structural capital, patents, brand, reputation, and often copyrighted material and patents, each of which play increasingly important economic and competitive advantage roles in profitability, sustainability, and growth potential, and hence should and must be addressed in wills, estates, and trusts.

There is, of course, a range of empirical studies, which, among other things, reveal that a significant moral distinction exists between (illegal) file sharing and theft of presumably tangible – physical property, even when the value of the intangible – tangible property is approximately the same.

So, for me, and my colleagues in the information asset protection and insider threat – risk arena, it seems, the more engaged we become in intangible assets and businesses and transactions driven by or have intangible assets routinely in play, the more complex and broader the dilemma becomes.

Illegal downloading is, of course, a real and persistent problem, that in all likelihood, will not be going away anytime soon.  Individuals work hard to produce creative works and are entitled to enjoy legal protection as well as reaping any economic benefits from their efforts.  If others want to enjoy those creative works, it’s reasonable to make them pay for the privilege.

Continuing to frame illegal downloading as a form of stealing, probably warrants some review by companies.  Companies may better position themselves if they consider a range of legal concepts that fit the nature and elements of the problem more appropriately; first one being, fully understanding intangible assets.

The most effective fix does not lie solely in terminology!  Rather, what we collectively come to call a particular type of crime is obviously important as is coming to grips with the notion that treating different forms of property theft, misappropriation, etc., be it tangible or intangible property, while it may seem clumsy for a while, it’s probably what we should be considering.

This post was inspired and adapted by Michael D. Moberly from a piece authored by Stuart P. Green published in the NYT’s on March 28, 2012.

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance. And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

 

Understanding Intangible Asset Value: Key To Mitigating Risks and Threats…

October 10th, 2012. Published under Enterprise risk management., Intangible Asset Value. No Comments.

Michael D. Moberly     October 10, 2012

Information asset protection programs (for companies) should be constructed to withstand the inevitable consequences of ‘category five hurricanes or Richter scale 5+ earthquakes’!

The proper starting point for achieving this level of sustainable protection is to be alert to anecdotal accountings that provide important glimpses into new techniques, methodologies, and perhaps most important of all, the players.  However, to ensure that the asset protection policies and practices address and mitigate specific and growing number of challenges, risks, and threats,  I strongly urge practitioners to take the time to become well versed in the most current and objective findings of social science research.  Too me, anything less is reckless.

But, perhaps worse, being unreceptive or unwilling to integrate relevant research( findings) in an enterprise-wide information asset protection program can be  uncannily apparent to both insiders and outsiders, serving as a global beacon, of sorts, to economic – competitive advantage adversaries that vulnerabilities exist,  they can be targeted, they can breached, and assets compromised with a high probability of success.

That readers, conveys the level of sophistication which many adversaries have already achieved and regularly hone to stay well ahead of their respective, all be it, illegal curve!

Readers’ who elect to construe these characterizations as over dramatizations, would not only be mistaken, but it likely suggests they’re simply not current about the risks/threats posed by increasingly (ultra) sophisticated and organized groups of state sponsored, independent actors, and a host of legacy free global (economic – competitive advantage) adversaries, each functioning quite effectively, efficiently, and profitably in the increasingly predatorial and winner–take-all global business transaction environment.

Integral to achieving this defensible level of information asset protection is understanding that today, 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, future wealth creation, and overall sustainability lie in – evolve directly from an array of intangible assets, most of which are outgrowths of internally developed intellectual, structural, and relationship capital and intellectual properties.

In far too many instances, however, I observe information asset protection practitioners and programs that appear to have been constructed using quite conventional  ‘infosec’  frameworks…

  • designed to address subjective, anecdotal, or one-off types of (information asset) threats, risks, or events, or
  • based on pre-conceived and outmoded notions of who the adversaries’ are, their origins, motives, MO’s, and beneficiaries (recipients) of any misappropriated (information, intangible) assets, or
  • that are country (adversary) specific.

So, in many instances, what such initiatives don’t do, or, do poorly, is to distinguish – focus information (intangible) asset protection resources on specific and/or bundles of intangible assets which…

  • elevate company or project value by delivering sources of revenue, competitive advantage, market position, reputation, and
  • serve as ‘building blocks’ for (company) growth, future wealth creation, and sustainability.

For the remainder of 2012, and for the foreseeable future, intangible assets are, I am confident, the focal points (targets) of global economic – competitive advantage adversaries and economic espionage.  Why?, because it’s the intellectual, relationship, and structural capital (know how) they’re after!

C-suites, including CSO’s, CIPO’s, CTO’s, CRO’s, and CFO’s would be well served to acknowledge the above by distinguishing their company’s intangible assets on the basis of where their company’s value, sources of revenue, competitive advantages, and ‘building blocks’ for growth and sustainability lie, i.e.,  the…

  1. Objective value the assets deliver relative to being directly linked to business operations and continuity, i.e., legal, financial, etc.
  2. Subjective value the assets deliver, i.e., that which flows from the nature and/or context of the assets, i.e., customer lists, pricing lists, relationship capital, strategic planning, new product launches, etc.

Equally essential to constructing effective information (intangible) asset safeguards is recognizing that intangibles are now, more than anytime previous time in business governance history, routine components to any/all business transactions.

Business realities dictate then, knowing precisely which intangible-information/knowledge-based assets carry the greatest value and competitive advantage, will be on most every adversary’s ‘shopping list’.

For these reasons, I recommend information (intangible) asset protection measures be framed around this key principle…the immediacy and criticality of adverse (economic, market, competitive advantage) impacts should specific risks-threats materialize.

Integral to this principle, is understanding key methodologies for valuing information-based (intangible) assets, i.e., based on their…

Fair Market Value – the price which property (ala intangible-information assets) would exchange hands between a willing buyer and a willing seller with neither being under any compulsion to buy or sell and with both having reasonable knowledge of the relevant facts regarding the assets.

  • However – in instances in which an insider acquires and sells information assets to an information broker, business intelligence operative, competitor, or foreign agent without knowing the ultimate end user, ‘fair market value’ is merely a euphemism for the highest price.

Value-in-Exchange – Considers the actions of buyers, sellers, and/or investors. It implies the value at which, in this instance, intangible (information-based) assets would sell (legitimately) if offered – became available on a piecemeal or compartmentalized basis.

  • However – proprietary information, trade secrets, or other forms of intellectual property sought and illegally acquired by an insider are likely to have multiple and/or standalone elements of value, i.e., a formula, plus the process to operationalize that formula.

Value-in-Use – The value of a unit of proprietary information and/or trade secret that produces on-going contributory value to an enterprise.

  • However – the information asset that is sought and acquired is integral to a company’s business operations and is necessary to sustain company value, sources of revenue, market share, competitive advantages, reputation, etc., i.e., Coca-Cola syrup recipe.

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance. And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

 

 

 

CSO’s…Information Asset Protection Policies Must Isolate Insiders!

October 8th, 2012. Published under Insider Threats, Intangible asset protection. No Comments.

Michael D. Moberly   October 8, 2012

Anecdotal accountings and a multitude of studies identify gradations, motives, tenacity, and intensity of the threats-risks posed by ‘insiders’.  Insiders engage in a range of adverse acts which include theft, misappropriation, and/or leakage of information (intangible) assets that compromise the value, revenue, competitive advantages, and ownership of proprietary information, know how (intellectual capital), trade secrets and other intellectual properties.

Unfortunately, challenges remain insofar as obtaining objective and replicable evidence, beyond anecdotal reports, to describe the full adverse economic-competitive advantage impact of materialized insider risk events, other than to broadly characterize them as being substantial and probably growing.  When insiders are successful in perpetrating asset-data breaches and/or thefts, public reporting is now often mandated by statute which in turn often produces costly and often irreversible consequences affecting, among other things, a company’s reputation.

Through my lens, companies are now obliged, more than ever before, to…

  • re-think their information asset protection policies to thwart risks/threats from insiders, which all-too-frequently, begin and end during employee on-boarding processes.
  • recognize that periodic (in-employment) re-assessment is necessary and include the means to identify and assess post-hire…
    • receptivity
    • inclination
    • predisposition…

….to engage in adverse acts and/or policy violations that will compromise a company’s valuable and revenue producing information (intangible) assets.

The necessity for companies to comprehensively address risks – threats posed by insiders is elevated in large part because of the economic fact – business reality that 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth and sustainability lie in – directly evolve from intangible assets, many of which are rooted in – emanate from, as previously noted, from intellectual properties, proprietary information, and other forms of intellectual, structural, and relationship capital.

So, as company’s value, sources of revenue, and ‘building blocks’ for growth, sustainability, market position, future wealth creation, and competitive advantage are increasingly and inextricably linked to information-based intangible assets, the will and resources necessary to effectively mitigate insider risks-threats should become a routinely visited fixture not just on every CSO’s dashboard, but, every company’s c-suite agenda!

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance. And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

CSO’s…Differences Between Information Security and Information Asset Protection!

October 5th, 2012. Published under Economic Espionage, Enterprise risk management., Trade secrecy.. No Comments.

Michael D. Moberly   October 5, 2012

The context,…‘if a hole is found in my company’s or my client’s proprietary information fence, the job of information security is to patch the hole, but, the job of an information asset protection specialist is, in addition to helping patch the hole, DETERMINE

  1. What caused the hole in the fence to occur/form in the first place, and were there precipitating circumstance or triggering factors…?
  2. Under what circumstances was the hole in the fence initially discovered…?
  3. Who, if anyone, knew the hole in the fence existed before it was discovered, but did not report it…?
  4. How long did the hole in the fence exist before it was discovered…?
  5. What information assets moved through the hole in the fence before it was discovered and patched…?
  6. Is there evidence that the information/data-based assets that moved through the hole in the fence before it was discovered and patched were specifically targeted or merely arbitrarily acquired…?
  7. How much (economic) hemorrhaging and/or impairment to (asset) value, materiality, competitive advantage, brand, reputation, ownership, trade secrecy and/or strategic planning, etc., occurred as a result of information assets moving through hole being in the fence…?
  8. Is it known who the recipients of the information assets that moved through the hole in the fence are, before it was discovered and patched…?
  9. How will the recipients likely use – exploit those information assets…?

The responsibilities of information (security) asset protection specialists are now cross-functional and converge with risk management, HR, IT security, intellectual property counsel, audits, valuation, R&D, reputation risk, and brand integrity, among others.

To mitigate adverse effects – consequences do to information asset losses, compromises, and/or misappropriation, an important key is to collaborate with professional domain above with a singular objective;  sustain (protect, preserve) control, use, ownership, and monitor the value and materiality of a company’s information-based (largely intangible) assets!

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance.  And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

This post was adapted by Michael D. Moberly and inspired by a speech made by Dr. Joel Brenner, then Director, Office of National Counterintelligence Executive (ONCIX) to the American Bar Association in Washington, D.C., and author of ‘America The Vulnerable: Inside The New Threat Matrix of Digital Espionage, Crime, and Warfare’.

Non-Compete and Non-Disclosure Agreements: They Can Be Useful Intangible Assets If You Know How To Unravel and Assess Them….

October 4th, 2012. Published under Reputation risk.. No Comments.

Michael D. Moberly   October 4, 2012

In today’s increasingly competitive HR environment, prospective and repositionable candidates can be readily identified from virtual pools of global applicants.  But, with increasing frequency, they come to their new position already wrapped in non-compete (NC’s), confidentiality (CA’s), and/or non-disclosure agreements (NDA’s) that have, quite wisely in most instances, become routine requisites to employee hiring (on-boarding) processes.

In western contexts, the rationale underlying non-competes and their first cousins’, i.e., NDA’s and CA’s, is to establish ‘boundaries’ which new hires are legally bound to function for a specified period of time.

In some instances, such employee (contractual) agreements can limit the speed which companies can realize the most contributory value from new hires. That’s due, in part to (a.) the duration, (b.) what’s covered in a NC, NDA, or CA, and (c.) whether there may be multiple (overlapping) agreements in place.   Thus, it’s essential to unravel and assess these agreements insofar as their relevance to the hiring company, and then be able to legally navigate such agreements to avoid, among other things, reputation risks.

Also, in today’s necessarily sensitive HR environment, any cultural, legal, and/or religious contexts embedded in a NC, NDA, and/or CA which could hamper and/or delay a new hires’ eventual contributory value must be sympathetically assessed.

It is true, that some new hires are either purposefully or inadvertently remiss in describing the specifics of previous NC’s, NDA’s, and/or CA’s.  Too, some employees pay insufficient attention to the language in employment agreements or perhaps don’t fully comprehend the legal boundaries which the (agreement) language imposes on their opportunities to pursue employment elsewhere in the future, especially if it is with sector competitors.  Others hold the mistaken impression that the only employee agreement which they are legally bound, are those signed with their most recent employer.

Collectively speaking then, the time and attention devoted to unraveling and assessing prospective hires’ previous employment agreements can mitigate reputation risks, make for more informed hiring decisions, and reduce the probability that potentially problematic employees will be inadvertently hired.  Being on the receiving end of an allegation of violating a non-compete and/or a cease and desist letter can certainly diminish – undermine the contributory value of not only a new hire, but a company’s overall reputation.

Ultimately, the long held adage ‘ignorance is bliss’, carries, in my view, little, if any relevance in today’s virtual and global recruitment and hiring environment.

So, the onus is on every employer, throughout their respective (new hire) on-boarding processes, to not just inquire, but verify the boundaries of any and all employment agreements that may still have an effect on an employee’s contributory status.

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance.  And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

(Inspiration for this post evolved from a fine piece authored by Molly Joyce and posted in ‘Non-Compete Enforceability, Practice & Procedure, Restrictive Covenants’ on September 28th, 2012.)

E-personation, Reputational Harm, And The Internet…

October 1st, 2012. Published under E-Personation, Reputation risk.. No Comments.

Michael D. Moberly    October 1, 2012

I’m confident there remain intangible asset practitioners and strategists like myself who, while possessing an operational familiarity of reputation risk and e-personation, relative to the various contributors and adverse consequences, may not be familiar with California’s Criminal E-Personation law passed in late 2010.

For intangible asset practitioners, it certainly should not rise to the level of ‘rocket science’ to recognize most company’s reputation and e-personation risks-threats have elevated considerably in the past decade, in terms of the speed which either can occur, and the adverse and costly consequences that are all but certain to follow.

Neither should there be unexpected outcomes in today’s increasing wired and interconnected environments, as there are countless means available to ever expanding categories and variously motive driven adversaries and antagonists to affect e-personation and its first cousin, reputation risk/harm utilizing the Internet.  The particularly troublesome variant, e-personation, which in California at least, makes it unlawful to knowingly and without consent credibly impersonate another person through, or on an Internet website or by other electronic means with the intent to harm, intimidate, threaten or defraud others.

For me, the terms ‘credibly impersonate’ are the key factors in this particular law, and probably the one’s which are argued most in terms of distinguishing parody and satire from a genuine intent to perpetrate harm, intimidation, fraud, and/or threats.  The California law describes an impersonation as being credible when another person comes to reasonably believe that the defendant was or is the person who is being impersonated.

As reliance on the internet increases globally, there is certainly no shortage of opportunities and ways for abuse to present themselves as e-personation and reputation harm/risk. Previously, individual or corporate victims have typically been left without adequate legal remedies – protection to stop these types of abuses. Now California, and other states’ laws, i.e., Pennsylvania, Texas, etc., will at least be better positioned to partially rectify this problem by

  • expanding the current impersonation statute to include impersonation done on an Internet website or through other electronic means such as email, Facebook, Twitter, and other social media websites.

Needless to say, previous law, addressing false impersonation was certainly not conceived nor drafted with 21st technologies in mind, and therefore is largely outdated and of little use to effectively combat this expanding and often costly challenge.

More specifically California law makes it a crime to…

  • falsely impersonate another in either his or her private or official capacity.
  • knowingly access and, without permission, alter, damage, delete, destroy, or otherwise use any data, computer, computer system, or computer network in order to devise or execute any scheme or artifice to defraud,
  • deceive, or extort, or wrongfully control or obtain money, property, or data.

Quite appropriately, California State Bar Associations’ recent (September 12, 2012) ‘IP and the Internet Conference’, speakers’ Timothy Yip, in-house counsel for Twitter, and Charles J. Harder from Wolf Rifkin, focused their respective presentations on legal issues and practical insights into the problems associated with online imposters, defamers, and infringers.

From a practical perspective, Mr. Yip and Mr. Harder recommended that…

  • companies who are dealing with reputational harm on the Internet, such as in Yelp or Amazon reviews, should familiarize themselves with the features, practices, and policies of these sites.
  • for example, when something appears a company does not like, it should preserve it immediately (e.g. screenshots) in case they want to bring further action.
  • but, Mr. Yip and Mr. Harder respectively suggested, companies should not expect that the harmful or disparaging information will remain online for indeterminate periods of time.
  • in addition, they agreed, companies should be careful to preserve this information. If, examples, the matter goes to litigation, companies do not want their CEO or trial lawyer forced into becoming witnesses. merely for the purpose of authenticating the screenshot or printout.
  • and finally, both gentleman recommended designating someone, such as a permanent paralegal, etc., to preserve and later authenticate the document.

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance.  And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

(Special thanks goes to (1.) Shelly Wutke is a freelance writer based in Vancouver writing for www.reputation.com, and (2.) a summary of the ‘2012 IP and the Internet Conference’ presented by the State Bar of California written by Daniel Joshua Salinas, and (3.) California State Senator S. Joseph Simitian (11th District), the key sponsor of this legislation.)