| We have entered the Age of Perceived Risk where
nothing is now risk-free—least of all, being a company
director. Look at the rallying cry of most if not all special
interest groups and NGOs. Consider U.S. President George Bush’s
pronouncements on corporate responsibility. In an election speech
on 6 Aug. 2004, Bush stressed transparency in companies with
a clear echo of Enron and the subsequent Sarbanes-Oxley legislation:
"If you're a CEO in corporate America, you're responsible
for telling the truth to your shareholders and your employees."
Consider, too, the ever-increasing number of European directives:
the EU CORPORATE GOVERNANCE ACTION PLAN issued for consultation
mid-2003, the EU Sustainable Development Strategy adopted by
the European Council at the Gothenburg Summit in 2001, and Council
of Europe Green Paper "Promoting a European framework for
corporate social responsibility" (2001).
 Behind
this new age is the loss of trust and credibility in institutions—within
the corporate and public sectors—in the face of real
consumer angst and social power, and the might of the litigant.
These developments present risks and challenges that organisations
cannot ignore.
In recent surveys, when asked if they cared about their reputation,
not surprisingly, nearly all CEOs said yes. Yet when asked
if they measured it, or even monitored risks to their reputation,
less than a fifth to a third were doing so. The same is true
for regulatory risk. In the latest study by the London School
of Economics for legal experts DLA
, 96 percent of 50 among the FTSE250 Company Directors interviewed
believe that regulatory risks are growing, but nearly a third
(30 percent) of boards are unaware of the activities within
their organisation which may lead to regulatory intervention.
Less than one in five (18 percent) are ‘very confident’
in their risk management processes.
As an organisation’s key audiences become more wary,
directors must be prepared to deal honestly and effectively
with the complex web of risk controversies and to develop
their skills in negotiating with players whose perspectives
and priorities may be radically different from their own.
Welcome, then, to the world of risk assessment, the world
of measurement and the world of assessing and balancing the
expectations of a variety of increasingly important stakeholders.
 Company
directors need to know
• What is changing in the external world
• How this affects where we want to go
They need to keep themselves up to date on a weekly, and
sometimes daily basis. By the time they see the results of
an interview-based study taking several weeks or months, the
world will have moved on. There may be new issues and active
stakeholder groups to consider, ones that were not even on
the horizon when the study was started. The challenge is to
identify the new issues and their champions as they emerge,
before they have gathered momentum and become hard to influence.
Methodology
Internal audits and external stakeholder research are essential,
because they can provide the depth of analysis and the strategic
context without which it would be dangerous to act. But these
processes lack speed. The analysis of on- and off-line media
content and key stakeholder and competitor web sites provides
a rapid, and by no means superficial, insight into corporate
reputations as they evolve, and issues as they emerge.
Which issues are likely to present risks in the near future,
and what will the impact be on your reputation?
For speed and comprehensiveness, the web is unbeatable. The
issue-research challenge is to cast the net wide enough to
pick up information from a vast and ever-expanding search
domain, identify what really matters and analyse it in depth,
without drowning in data. You cannot analyse the whole web,
any more than you can interview every potential opinion-former.
But if you limit your search to the ‘usual suspects,’
i.e., the sites you are familiar with and search-terms that
form part of your everyday corporate vocabulary, you will
miss the early signs and the weak signals.
The most promising approach to this challenge is to list
your usual suspects, use external consultants and opinion
formers to add just a few to the initial list, and start the
search with as large a set of search terms as you can handle.
Then remove duplicates and eliminate records ruthlessly, using
judgement more than technology. But also expand the search
domain, in a controlled manner, by screening and adding linked
sites. You identify emerging influentials and their issues,
but avoid adding those communicators nobody is listening to.
There is still a long way to go in developing these methods,
but already we are seeing results that are helping to focus
minds in the boardroom.
Priorities for Management Attention and Action
By integrating stakeholder and content data into available
organisational knowledge about stakeholder relations and the
changing perceptual environment, we add insight into emerging
issues, which may not yet have moved into the visual range
of directors. We identify and interpret those that may present
future threats or opportunities for the company, and integrate
the external and internal information to help focus the board
on the priorities for present action.
In the move towards greater sustainability (in the broadest
sense of the word), organisations need to scan the horizon
of stakeholder expectations—and most importantly—hear
their early warning signs of emerging issues and uncertainties.
Today’s organisations ignore this basic approach at
their peril. It smacks not only of gross irresponsibility,
but, increasingly, of gross misconduct as well.
Echo Research Group, international specialists in reputation
analysis and communication research, provides intelligence
about perception and image, to help clients understand the
structure of their reputation and maximise their strategic
decisions. With 165 analysts, Echo has offices outside London
(in Surrey), Brussels, Paris, Stockholm and New York. Echo's
clients include a quarter of the FTSE and Fortune 100 and
Government Departments. Echo works across a number of industry
sectors, with particular expertise in Environment, Government,
Consumer, Financial Services, Health, IT, Telecommunications,
Media, Professional Services, Public Sector and NGOs. More
information and resources can be found at www.echoResearch.com.
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