Business Receptivity to Reputation Risk…

I am hopeful readers interpret the intent – content of...of this post to be consistent with proactive messaging which I have endeavored to convey in each post.

The reason; it’s increasingly essential in the go fast, go hard, go globaland predatorial business (transaction) environment, to anticipate, assess, monitor, and mitigate risk(s) to a company’s proprietary intellectual and structural capital and other intangible assets and intellectual properties as far in advance of the inevitable risk materialization, as possible.

For starters, let’s stipulate that prior experiences and previously exhibited demeanors of business leadership, may…

  • be ‘predictably relevant indicators’ of future behavior, reaction, and practice on a range of issues and circumstances related to business operability, one aspect of which is,
    • how materialized – materializing business reputation risk(s) are addressed.

For various reasons, U.S. businesses, and others globally, are experiencing…risks which materialize to adversely affect reputation with more regularity, spontaneity, and speed. This is what the expanding genre of reputation risk specialists routinely point out is occurring. Expect no big argument coming from me on this matter!

After all, the  ‘reputation’ of an individual, a business, or an institution can be, and routinely is a…very valuable, revenue generating, and competitive advantage intangible asset that is variously fragile, receptive, and vulnerable to the asymmetries which reputation risk(s) can materialize, manifest, and cascade at keystroke speeds!

A not insignificant percentage of adverse business reputation risks…commence – materialize internally, i.e., inevitable, self-inflicted, long fuse implosions which spontaneously bring reality and scrutiny to what previously were whispers, i.e.,

  • regarding sexual misconduct, lapses in judgement, oversight , or best practice, anyone of which may manifest as
  • acts of negligence, discrimination, Title IX filings, or ‘slow walked’ or haphazardly conducted investigations…liabilities!

So, for this post, let’s add another stipulation…that numerous businesses, organizations, and institutions have variously squandered their valuable, revenue generating, and competitive advantage reputations’ through combinations of any of the above.

Not infrequently, when reputation risk…ala misdeeds, surface, there are various connections, successive layers, and perhaps years of leadership inaction, ala Michigan State, Penn State, Ohio State University, and perhaps Boeing, Monsanto, Takata, and Volkswagen, etc.,

  • wherein, the presumptive origins of the risk(s) appear to have routinely or perhaps purposefully minimized or compartmentalized in terms of describing the flaw, number of ‘bad apples’ involved, and victims.

Looking deeper into the often needlessly tragic and always costly phenomena of materialized reputation risk... seldom, in my view, is the misconduct, negligence, or discrimination, etc., merely a single, unrelated (collection) one-off’s, i.e., coincidences.

Instead, materialized reputation risk…not infrequently, represents an amalgam of leadership intellectual and structural capital challenges which can and likely have variously infected, cascaded, or become embedded in other operational aspects of business operation, i.e., the culture of an institution or company.

From the perspective of business – institution operation…the emergence – earliest stage of events-acts-behaviors known to produce reputation risk represent ‘window’ for (a.) endeavoring to mitigate the progression and exacerbation of risk, (b.) executing the correct strategies for mitigation to minimize further – potential (risk) cascading effects, and (c.) ensuring relevant processes – procedures are in place to monitor, assess, and differentiate current and future reputation risks.

It is at these critical junctures when(a.) public, consumer, and vendor trust is tested, (b.) reputation is more receptive – vulnerable to adverse reactions, and (c.) business leadership have specific, un-pardonable, decisive, and non-negotiable fiduciary responsibilities for transparency…

  • all of which is related to how the original reputation risk is framed and handled under the scrutiny of the public and media.

However, in a not insignificant percentage of reputation risk events… several of which have been previously addressed in this blog, once a business’s reputation is publicly ‘in harm’s way’, it becomes more

  • challenging and costly to mitigate, and
  • receptive – vulnerable to leadership missteps and miscues as either may be interpreted as mere grandiose action steps for remediation,
  • presumably intended to hasten ‘a return to operational normalcy’.  Readers are obliged to consider the more recent challenges experienced by Wells Fargo Bank on this matter.

Plainly speaking, it’s not ‘rocket science’ to acknowledge…that reputation risks, left unchecked, blindly overlooked, or ineptly addressed, are likely to produce cascading effects that further manifest as longer term downward (reputational) spirals which do not respond particularly well to conventional – obvious public relations characterizations to the contrary.

Be assured, I am not suggesting…that when reputation risks surface, the rapidity and appearance of decisiveness with respect to business leadership’s reaction, or exercising the option of ‘standing moot’ based on the notion of ‘taking the hit and weathering the storm’ are even viable considerations today. The answer; absolutely not!

Experience does suggest however…once revelations of reputation risk events – behaviors begin to emerge either from victims, journalists, or others, and reaches the matter manifests as a political issue, that’s when c-suites should assume exacerbating – aggravating circumstances, i.e., (a.) disregarded forewarnings for the imminence of the risk, (b.) chains of preceding negligent acts – behaviors, (c.) activities deemed criminal, and/or (d.) an orchestrated attempt to deny – keep relevant facts from public scrutiny, ala a coverup…

  • now, risk circumstances are likely spiraling beyond the control of the any business to rationally mediate, in the public – political domains, other than prepare for the inevitability of civil actions initiated by the victims.

Of course, the above characterizations and examples are intended to… serve as relevant ‘starting points’ for business leadership to begin re-examining…the uphill phenomena of ‘company reputation risk’.

I wish to frame reputation risk here – now…in the context of its ‘human origins’ absent engaging in a deep milieu of ‘psychobabble’ which I give wide birth and hold no particular credentials to do so other than my extensive ‘four cornered’ research on all things intangible.

The remaining 900 pound pink elephant in the room…grazing quietly in the corner is the seldom explored – examined underlier to this post, (and reputation risk in general) which I now pose the following question for reader consideration…

  • is it feasible, there are correlations between a company’s receptivity to and probability of experiencing significant reputation risk(s) relative to the cultures and/or temperaments conveyed by c-suites and management teams which unwittingly or knowingly translate as an innate receptivity for engaging in (risky) acts, behaviors, or circumstances which influence and can likely produce adverse reputation risk?

Yes, through my lens, I recognize such circumstances as…being quite feasible preludes to reputation risk acts – events. Again, I respectfully remind readers of my advocacy for endeavoring to be as proactive as possible as risk events – circumstances warrant.

I, as readers of this blog are likely familiar…there are numerous potential circumstances, many of which will inevitably surface during – following a reputation risk event, wherein the initial assumptions are leadership failed to engage reputation risk events as (a.) aggressively, and (b.) thoroughly as the circumstances (in retrospect) warranted, and (c.) at a much earlier stage in the ‘victim impact life cycle’ of the risk, ala Michigan State University and Ohio State University.

The inevitable ex post facto investigation(s), should it reveal…an absence of ethical – objective oversight, dismissiveness, or regard for consumer – customer – client – employee – student ‘due care’; that’s what must be addressed and remedied! In a not insignificant number of instances, investigations find leadership did not possess the necessary – relevant professional demeanor to lead in circumstances in which ‘high risk has materialized’!

Nothing particularly new here, right!…think Madoff, Halperin, Lauer, Avenatti, Schnatter, Wynn, Weinstein, Monsanto, Boeing, Takata, Volkswagen, and ‘oh so many others’.

Here, investigations revealed, not always surprisingly…the company was ‘in the cross-hairs of game changing – costly reputation risk’ relative to (a.) a product and/or service being produced, or (b.) repeated abhorrent behaviors.  Yes, perhaps each person’s – company’s reputation risk circumstance has its variously unique set of properties and rationalizations. Most know however, delaying, or purposefully endeavoring to shift those realities into the future as mere one-off’s, will likely exacerbate and harden public – consumer – victim reactions and elevate guesstimated costs toward remediation, should that remain an option.

In that regard, I will be following two of the above examples with special interest…

  1. Monsanto, having been recently purchased by Bayer, and with two successful jury awards regarding the possible carcinogenic composition found in the herbicide ‘RoundUp’ contributing to cancer, a U.S. judge has now appointed Kenneth Feinberg as mediator for court-mandated settlements…
  2. The probable – various strategies that may be advised for the Halperin’s, Lauer’s, Weinstein’s, Rose’s and others, who presumably – may eventually seek some manner of repentant entrée for return to their previous professions…

These particular-individuals and presumably countless others whose predatory misconduct has yet to surface…are the epitome of reputation risk. By most accounts, each discounted or wholly dismissed their reprehensible conduct (repetitive risk-taking behavior) as something other than what it actually was.

That, along with some pompous presumptions of omnipotence disadvantageously employed…translated as arrogant assumptions their victims (prey) would remain silent, thereby allowing their conduct to continue, presumably to the point of implosion and self-destruction.

Along with, in many instances…the dissolution of their primary salaries, their marriage, and most other near-term opportunities to personally and publicly generate new sources of income in-light-of their correctly tarnished (personal) brand and standing as presumably a respected professional. All of which, it’s not challenging to assume, will be for unknown, but likely, extended period-of-time, essentially rendering them persona non grata.

Through my ‘reputation risk lens’...and, as an intangible asset strategist, I consider, (again, not rocket science) Halperin, Lauer, Weinstein, and Rose, etc., and numerous other similar instances, as clear examples of reputation self-destruction – emulation.

But, not solely for the despicability of their conduct…but, in addition, (1.) their intimidation of subordinates, and the hostile work environments they so obviously contributed to creating, and (2.) the initial utter ignorance of or dismissiveness displayed by leadership about ‘the bad actors’ these men obviously were, for extended periods of time.

Each instance should, in my view, serve as…all-the-more essential ‘fiduciarily responsibility’ to be receptive to conversations, as re-occurring action items on c-suite – boardroom agendas across the U.S., regarding situations and circumstances, likely once overlooked or wholly dismissed, i.e., acts, events, mis-steps, and miscues which business leadership can learn from, should they be receptive!

Note: This post was inspired by Amanda Mull’s fine and relevant article in The Atlantic, titled Why Celebrities Are So Susceptible to Grifters: The brutality of fame can change the basic way people evaluate others. (May, 2019)

Michael D. Moberly  St. Louis May 28, 2019 [email protected], the ‘Business Intangible Asset Blog’ since May 2006, 650+ published (long form) blog posts, ‘where one’s attention span, business realities, intangible assets, and solutions converge’.

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