ISSUES& RISK MANAGEMENT

INTRODUCTION Issue is ‘a gap between corporate practice and stakeholder expectations’. Issues management is the process used to align organizational activities and stakeholder expectations. Issues management was coined by W. Howard Chase in 1977.

EXAMPLE Twenty years ago, being environmentally friendly, testing on animals or GMOs that important? Decline in public approval for business conduct. A rise in pressure group activity. The development and use of the internet Video http://features.peta.org/cruelty-free-company-search/cruelty_free_companies_search.aspx?Donottest=-1&Product=0&Dotest=8&Regchange=-1&Country=-1&Keyword=

THE FIRST MODEL Issue identification Issue analysis Issue change strategy options Issue action program, and Evaluation of results

PEST ANALYSIS PEST analysis: done in order to analyze the external environment. PESTLE is a variant with Legal and Environmental issues separated out. Political: where and how and when will government intervene Employment laws, environmental regulations, tax policy, political stability Economic: trends and forces shaping the economy Unemployment, energy prices, interest rates, inflation Sociocultural: demography, education, lifestyles, fashions Technological: changes in technology/software, rate of change, communications

DEFINITION Issues management is ‘the process of identifying issues, analysing those issues, setting priorities, selecting programme strategy options, implementing a programme of action and evaluating effectiveness’

ANOTHER EXAMPLE Issues management is preventative. Unilever, the largest buyer of fish in the world. Warning: a campaign (1996) by Greenpeace which would highlight decreasing global fish stocks Unilever established a partnership with the World Wide Fund for Nature. The two organisations formed a council Unilever to source all its fish from certificated fisheries only from the year 2000.

THE ISSUES LIFE CYCLE

ISSUES MANAGEMENT, THE FINAL WORD Born out of the public relations industry Not traditional 'PR' in two ways: -  Explains a company's position to the outside world, issues management recognizes that that position may not be defensible in the short- or long-term.   The company itself may need to change in addition to changing the opinions of those outside the company. -  Secondly, how companies react to political and societal change has wider commercial implications than on their corporate reputation. Successful issues management strategies can deliver competitive advantage, including increased market share. Issues management combines the disciplines of public relations and management consulting. 

RISK On a personal level we take risks crossing the road, travelling by train and making investment decisions. Much risk inherent in a business operation has been managed through insurance. What about the potential long-term reputation damage?

RISK MANAGEMENT Future happenings which could have a negative or positive impact with an uncertain probability. Uncertainty of outcomes, based on probabilities Closely linked to issues management. The process of identifying, controlling and minimizing the impact of uncertain events on an organization

BP TO CREATE SAFETY DIVISION Incoming CEO Robert Dudley called the moves `the first and most urgent steps in a program I am putting in place to rebuild trust in BP.‘ ``The changes are in areas where I believe we most clearly need to act,'' he said, ``with safety and risk management our most urgent priority.'' In a message to BP staff around the world, Dudley said that ``there are lessons for us relating to the way we operate, the way we organize our company and the way we manage risk.''

RISK MANAGEMENT We tend to deal with uncertainties through stories rather than probabilities. Thinking about probabilities does not come easily to the human mind. Constructing narratives does. We weave stories and fit events and expectations into them. Our ability to tell stories is a valuable asset, the means by which we make sense of disconnected information.

SCENARIO PLANNING “There is no reason for any individual to have a computer in their home” Ken Olsen (President of Digital Equipment Corporation) Scenario Planning: Key drivers with different weightings, imagining possible futures, plans of action • How various elements might interact under certain conditions • Beginning of the century, Airplanes and warfare: battleships might be sinked by bombs. US Secretary of War: “That idea is so damned nonsensical and impossible…I am willing to stand on the bridge of a battleship…” Schoemaker, “Scenario Planning: A Tool for Strategic Thinking” “No matter what happens, the U.S. Navy is not going to be caught napping.” Frank Knox, Secretary of the Navy, just before the Japanese attack on Pearl Harbour