The new CEO of The Institute of Risk Management embarks on his tenure by recognising the ethical as well as technical aspects of Risk Management.
Citing the huge potential for human trafficking and slavery hidden in the supply chain, Ian Livesy points to the need to identify and address reputational risk ( http://bit.ly/1Cszzmo ).
Primark paid $11million in compensation for their part in a factory collapse and loss of lives of workers. But the fine is just part of the disruption to business goals; forgiving and forgetting the association between the brand and the loss of life and intolerable working conditions will take some time. The loss of trust is significant. Fortunately, Primark were carrying a prevailing level of trust that allowed this disaster to be seen as a one off.
What if this was the latest in a long line of misdeeds? It could well have been the end.
Risk in supply chain and other features of a business plan commonly have technical and behavioural dimensions – they are often interwoven. There are two aspects to managing both.
The first is a “no brainer” - avoid behaviour that is not trustworthy!
The second is to build up stakeholder trust, if for no other reason, to mitigate a crisis – whether technical or behavioural. High trust generates a degree of empathy that will be crucial for the occasional misdeed. Trust is Insurance Cover!
Of course, consumer and stakeholder trust in general has more benefits. It encourages loyalty and advocacy. The Edelman Trust Survey 2015 found that 68% of consumers who trust will recommend – 58% of consumers who don’t trust will criticise!!
Consequently, Trust is a risk that isn’t worth taking and the ethical and behavioural factors that Ian Livesy endorses are critical to business resilience.
The Human Factor in Risk Management is the subject of a two day CPD Course hosted by the University of Liverpool at their new campus in London. The course will examine the psychology of risk and leave delegates with tools and techniques for deliberately maximising consumer and stakeholder Trust as part of Business Planning and Risk Management - http://bit.ly/1BJPQ77