Risk is the basis for life, given the advance of civilisation is entirely change-based. What if our species said, ‘nuh, sorry…I’m out – going back to the cave, folks.’
Because innovation is a change event, and humans are neurologically change-adverse – our primitive, instinctive reptilian brain function simply rails against it.
Business even constructed a communication framework to support people through workplace change, which manages organisational risk variables regarding adoption.
Otherwise, risk management is big business in its own right; as related to workplace safety and economic prosperity. However, with a world of scientific evidence in the information and technology ages, organisations continue absorb unnecessary risk.
Like Australian firm Denovo Consulting who, this week, ignored the evidential publication of their unethical business practices across three top social media platforms, with 48hrs and 24hrs respective notice to act.
This is good. It’s 2017: people know there’s a problem with unethical business. We don’t care which way business chooses to practice; we just want to know who is worthy of our trust and respect. Because smart professionals don’t align their brand with business that they aren’t proud to be associated with.
It might have escaped the attention of Australian business, but non-physical intangible assets such as brand equity, intellectual capital and goodwill are the dominate means by which they create value.
In fact, Harvard Business Review article, Risks and Reputation, put the American economy’s intangible market value at between 70–80%—and that was a decade ago.
Seven West Media chairperson Kerry Stokes and Beyond Blue CEO Jeff Kennett are great examples of brands willing to absorb reputational risk in their current crisis management mode; ie. risk management occurs well-prior to an adverse event.
Stokes backed his CEO, workplace lothario and sex scandal protagonist, Tim Worner who tabled a December media conference announcing a 91% company loss in six months.
‘Tim Worner, himself, continues to enjoy full confidence of the board as our CEO, where he is doing an outstanding job and he leads the best media team in Australia,’ Stokes told journalists.
‘There is no governance issue…the board will have no further inquiries. We were disappointed, we were forced to make such a serious investigation into such irrelevant allegations that have no substance at all.’
Apparently, Twitter-redacted SMS messages between Worner and Seven West combatant Amber Harrison, whereby Worner professed to being a chem-sex god, were inadmissible.
Stokes added he had received only four messages from concerned shareholders thus revealing his shareholder theory subscription; managers must maximise shareholder returns at all costs.
This is opposed to stakeholder theory, whereby a manager will balance shareholder and stakeholders’ interests; eg. employees, customers and the community, even if it reduces shareholder returns.
Again this month, Stokes further damaged his brand in refusing to release the audit report, clearing Worner of misconduct including corporate expenditure of $600k in three years.
As a result, former Royal Women’s Hospital Foundation Board chairperson and president and respected Gilbert + Tobin lawyer, Shelia McGregor immediately resigned the board citing ‘ethical issues’.
As for Kennett – the Seven West board member and Australia’s premier depression advocate is reimbursed $127k annually to represent an organisation that endorses well-documented female employee harassment.
So what would be the cost Seven West to mitigate the current reputational risk crisis? Apparently, only $245k owed to Harrison who contests the agreed separation fee was short.
That’s one arsey billionaire, I reckon – especially one indicting that they directly influence what future inquiries the board undertakes?
We know it would cost Kennett $127k to ensure his well-crafted benevolent image remains intact; but what would it cost for Denovo Consulting to protect their brand?
Nada…beside a direct hit to patriarchal pride. A couple of paragraphs, stating the bleeding obvious that could in fact win them business – sorry is still the hardest word to say.
And even professionals are getting it wrong, with advertising guru and fem-icon Jane Caro announcing on Monday breakfast television that two women featured in the now defunct Ultratune ad were ‘aliens’.
When Twitter-queried, Caro created a strawman as advocate against plastic surgery for ‘young girls’ standing by the vilification to her 17k+ audience, thus rendering a recent column professing to being a ‘woman’s woman’, as absolute crap.
Interestingly, risk is difficult to define – traditionally there’s little consensus: because how does one measure objective and subjective risk?
In 1921, Risk, Uncertainty and Profit author Frank Knight boils it down to this: risk is quantifiable uncertainty; eg. someone skydiving sans parachute suffers no uncertainty – they will die.
The engineering profession defines risk as the ‘product of the probability of an “undesirable” event occurring including expected harm assessment.’
But what about those life curveballs that impact psychology and ultimately, personal risk management frameworks? Like my old man – post Vietnam War.
Having survived a gunshot wound to heart and lungs, his brain injury reframed the definition of danger; ie. people are more dangerous than nature. So, Dad built a 38ft heavy weather boat and we sailed round-the-world for three years – in his words, he was ‘keeping us safe’.
Adventurers are by-nature, natural risk-takers; but they prime for as many known-unknowns as possible. So he prepared – smelting 12.5 tonnes of lead for keel ballast…right though to lead-lining the massive diesel engine bay.
Noise minimisation is important on a yacht. Built for wind, sailors engage engine power during risky manoeuvrers – like navigating a rocky entrance in a rolling swell, or for example, locating someone overboard off Shark Bay, West Australia at 3am in 3–4 metre seas…when we lost Mum.
In short, we-three teamed up and reversed Honeychild under engine power to her plaintive cries, ‘over here, over here’. Coming up port side, Dad with superhuman strength, reached into the drink and lifted Mum out, wet clothes and all – thus rendering $200 worth of foam lead-lining as priceless.
Whatever we know about risk, this is true – that undertaking risk, properly conceived, is often rewarding. And that’s the paradox: the real risk, is in not taking a risk. Just don’t forget the bloody lead-lining!