Blackhall & Pearl 39
All businesses face the prospect of sudden and unexpected reputational crises. Understanding internal vulnerabilities and how shifting societal expectations can put businesses at risk allows Boards and Management to anticipate, avoid and manage their exposure.

Business today operates in an environment of heighted social risk – the risk that arises when businesses find themselves out of alignment with ever-changing societal expectations.  These risks can be triggered by compliance issues, operational failings or legally permissible actions that are still seen by the community as a breach of trust.

Boards and Management need a sense of urgency around social risk.  A fundamental change has occurred in the ability of businesses to manage these risks, with the rise of social media, and its impact on traditional media, politicians and the community.  Social media means businesses no longer control what is revealed about them, when and how it is used.  Only by sharpening their social risk sensing, and acting in response, can Boards and Management stay ahead of reputational crises.

Blackhall & Pearl Approach

Using our Social Risk Diagnostics tool, Blackhall & Pearl works with Boards and Management to assess social risk vulnerabilities within a business.  By analysing internal incidents and external perspectives, Blackhall & Pearl can identify social risk indicators to reveal areas of vulnerability.  This provides an evidence base that forms the first part of social risk sensing – determining what current and emerging issues a business faces.

The second component of social risk sensing is the context base.  Unlike traditional risk, social risk is highly contextual.  This is why one incident can be a minor regulatory matter while another makes front page news.

To develop the context base, the social risk indicators are assessed against the forces shaping societal expectations.  Those forces can include the decline in trust in institutions, people’s sense of a loss of control over their lives and their zero tolerance for perceived abuses of power and privilege.  Assessing the social risk indicators against these forces reveals the social risk profile of the business.

Only by understanding internal vulnerabilities and external context can Boards and Management respond effectively to social risk.

Client Benefits

Applying Blackhall & Pearl’s Social Risk Diagnostics allows Boards and Management to identify, understand and manage actions that can trigger a community backlash.

Specific benefits include:

  • A deepening of the Board and Management’s sensitivity to social risks and how they emerge, allowing more effective anticipation of potential reputational crises.
  • A profile of the business’s current and emerging social risk vulnerability.
  • A Board risk register that includes material social risks.
  • A dynamic incident register that provides a learning tool for the business.
  • An assessment of whether the business is actually learning from past incidents, and applying those lessons effectively.