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Reputability are thought leaders in the field of reputational risk and its root causes, behavioural risk and organisational risk. Our book 'Rethinking Reputational Risk' received excellent reviews: see www.rethinkingreputationalrisk.com. Anthony Fitzsimmons, one of its authors, is an authority and accomplished speaker on reputational risks and their drivers. Reputability helps business leaders to find these widespread but hidden risks that regularly cause reputational disasters. We also teach leaders and risk teams about these risks. Here are our thoughts, and the thoughts of our guest bloggers, on some recent stories which have captured our attention. We are always interested to know what you think too.

Saturday, 11 December 2010

Kowtow now, risk your reputation

Savvy netizens are bringing cyber-warfare against those they see as complicit in government attempts to censor Wikileaks.  Amazon, Visa, Mastercard and PayPal are among those so far targeted by activists for making Wikileaks' activities more difficult. After initial denials, PayPal has admitted that it acted as a result of US government pressure.  It would not be surprising to find this is a common pattern.

In bowing to demands from powerful stakeholders such as governments, companies are taking the obvious path of least resistance - and taking a substantial risk. Other stakeholders, not least their customers and other internet users, also have opinions and power of a different kind. Anonymous is only one of many.

The internet makes it easy for those with grudges to nurture and grow them. In the early 1990s, before the rise of the internet, the oil industry faced long-term disputes with environmentalists about how to decommission old oil platforms. This unresolved issue exploded when Shell's Brent Spar platform was ready for disposal. Shell had to change course even though its original plan seems to have been technically sound.  More recently, in 2007 HSBC faced a facebook threat of a graduate boycott.  It too changed course. And Nestlé still seems to face an unresolved campaign against them about formula milk that dates back to at least 1977 and probably 1974. It represents a continuing risk.

This matters. Nearly ten years ago, the perceptive Anthony Hilton  observed that technology now allowed the public to mobilise against the Establishment.

How true and how ironic. Governments have encouraged the internet to grow to the point where its continued operation is one of the most critical services for the continuation of life – including government - as industrialised countries now know it.

Yet in doing so, governments have created a scourge with which the public can chastise them more effectively than ever. As current attempts at what many see as censorship by both the US and Chinese governments show, the features that give the internet its resilience against disruption have a corresponding aspect that make it possible for a movement technically to outwit even a government. And it has become far simpler for a loose grouping of aggrieved netizens to start and run campaigns that can strike fear into the Establishment.

That doesn't just mean governments. It includes commercial operations of any size. Especially where individuals have choices. Kowtowing to governments may seem an easy option - and it often is in the short term. But kowtowing now means taking reputational risks. The cowed can find themselves crushed when aggrieved stakeholders get the opportunity for revenge, perhaps years later.

Anthony Fitzsimmons 

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