2012 Conference: Issue and Risk Management
Corporate citizenship practitioners must have an expanded repertoire of business skills that includes issue and risk management. Challenges arise from a broad range of stakeholders and can threaten every aspect of a company from its reputation and license to operate, to the bottom line.
Three broad steps of risk management are to learn, research and take action in order to create opportunity from negative concerns/issues.
“The more transparent and engaging you are with your constituents on an ongoing basis create an opportunity to “agree to disagree,’” explained Tracy Bame, director of community development-Americas, at Freeport-McMoRan Copper & Gold. Bame discussed her company’s robust risk system, which spans from risk identification to assessment to action. Within the system is a tool for classifying issues that may arise within current operations, the Risk Matrix. Using the tool, issues are initially evaluated and classified by the likelihood of the risk occurring and secondly for the consequences if it were to occur. Consequences can fall under various aspects of the business including financial, reputation, legal, and impact on local communities. All issues are scored so that actionable risks (top priorities) are easily highlighted. Within the system, corporate social responsibility professionals oversee social and community issues as well as to serve as consultants for the company outside company walls.
When Nestle Waters purchased spring water provider Poland Springs along with a bottle plant and natural springs, the company became owner of 400 acres of watershed resources. This purchase suddenly put Nestle in a radically new role – steward of the environment. This propelled the company to think and act with a sustainability focus, and in 2008, it issued its first Corporate Citizenship Report. The company learned what key stakeholders were thinking, obtained expertise, and picked up best practices from others.
Later, Nestle conducted research of its business to understand its carbon footprint. The 2010 Life Cycle Analysis found that 50% of the company’s carbon footprint was attributable to the oil consumed to create the existing plastic bottle. So listening, researching and learning the company met their goal of reducing the “amount of bottle.”
Heidi Paul, vice president of corporate affairs, Nestle Waters North America, explained, “We thought we were pretty good,” but a major, and to Nestle unforeseen, issue eventually confronted them once again. Consumers felt that, “packaging and raw materials should not be thrown away…” So again, Nestle, set a goal by working and learning from others-to achieve recycling goals.
To avoid the potential, “I didn’t see it coming” reaction to issues, sound risk and issue management demands frequent ongoing engagement with stakeholders. Additional, internal coordination with all functional areas/group or operations, specifically those who “touch” or manage an external issue are also critical dialogues to foster. These steps can also serve to minimize issues that will arise, as it can build a basis for trust among constituents.