Risk mapping in CSR - could it become mandatory?
With just over a month to go until FERMA Seminar in Antwerp, we caught up with Philippe Noirot, AMRAE Board Member and Chairman of the ERM 360° Committee who will be speaking at our ‘Risk mapping in CSR - could it become mandatory?‘ session on Day One.
As anticipation builds ahead of our intense programme, here is a sneak peek from Philippe into his insights on ethical corporate behaviour and risk mapping, and what he will be covering in his workshop.
Q - How do you see society shaping ethical corporate behaviour in the next 10 years?
PN: Ten years is a very long time to look ahead - if you look back 10 years to 2008, who would have foreseen the success of Uber or Airbnb?
If we look at the signs that we can see now, we can see more transparency in the behaviour of corporations, mainly due to the visibility of data. We can also see a steady flow of corporate interest to manage new cycles - for instance the fact that we are ‘always connected’ as an alternative to the traditional media, which means that there is immediate communication of any event in the world.
We see increasing expectations by consumers too; In 10 years from now, I would say that these trends will probably continue and focus on the CSR / ethical corporate behaviour. The major trend is towards higher and higher CSR and ethical expectations from the stakeholders, so transparency is really expected, and the laws will probably become tougher with additional sanctions for companies that are not transparent or fair enough. I would say that risk communication and integrity will probably become the rule one day - the risk map which is not yet communicated so much will probably become a priority in the future.
Do you have a sense of when risk mapping and the new horizon of transparency and greater communication will become the norm?
PN: I guess that in 10 years from now, all the quoted companies will publish their risk maps in some way, not only the CSR risk map. Maybe not in all the countries in the 5 coming years.
Q - How is it possible for companies to stay ahead of the demands from regulators and customers and be seen to ‘lead’ rather than be ‘pushed’?
PN: My feeling is that regulation always runs behind technology and it means that the companies who see this as an opportunity to work in an irresponsible way will probably find that accountability eventually arrives. The same point applies to the customer and public opinion.
The way to stay ahead and to be seen as a leader is to behave responsibly; the major expectations in the next 10 coming years will be around the CSR. That means that probably, thinking about all of the stakeholders affected by the new lines of business, the economy, society, top management, we have to think about both the short and long-term implications. The new way of thinking in terms of risk management is the capacity to include in the risk map, not only the short and medium issues but also the longer-term ones. That will be difficult as it will need a kind of listening from the top management which is not the case today regarding these long-haul states. Leaders will have to stay ahead by anticipating wider expectations to come from the stakeholders.
Q - Balancing the cost of production against the willingness of customers to purchase at a price, as well as the returns to the business, is essential, so what type of commercial advantage can the ‘leaders’ in this space expect?
PN: I think it’s a mistake to think that consumers fall neatly into marketing boxes. Even so, there will always be people who want the best and there will always be people who want the cheapest. That’s already a kind of paradox. More importantly, there is a whole spectrum of people in between those poles and what they want can be summarised in 3 bullet points:
- People are increasingly not buying products, they are buying into a service and an expectation of trust. They probably want to show that they are affiliated with respected brands, but not just brands, also ideas. Values with brands because the product is also important.
- Companies who want to be leaders in this space need to reflect on whether they want to be leaders just for today and tomorrow or if they want to remain leaders in 5 years’ time; that’s the moment where what we envision lines up with the strategy. I believe that risk management at a glance, CSR and ethical behaviours specifically, may be an element of the strategy-making in the future, one way or another.
- There is no magic formula: not every company can be a market leader. We can’t even guess who the leader will be in 10 years from now. When we look back, we think about Kodak and Nokia that were major brands, but they just disappeared because of strategic mistakes.
Perhaps, one of the major strategic mistakes to avoid in the next coming years is to consider CSR and ethical as nothing or underestimate these topics.
To come back to the green aspect and to conclude on it, perhaps in the future it is going to become essential in the decision-making of society, as well as the origins of the product. Obviously, these additional costs for a company to be green will be added into the selling prices as a price of quality, which means that the cheapest probably can’t be as green.
Beyond the CSR and ethical topic only, I would say that the next step for risk managers is to move towards a ‘risk and opportunity manager’, the best way to be listened by the top is not only bringing bad news or bad potential news but also to analyse in roughly the same way as we analyse risk, the good news; so the risks that could become opportunity. I think that globally speaking, beyond CSR, analysing opportunity is not so different to analysing risk. The question is to get all the sufficient knowledge to underline the opportunities. It’s so easy for us to analyse the impact of a risk but so difficult to identify the positive consequences of an opportunity, or to measure it. The main measure would be image and reputation for instance, but it’s still difficult to measure. I think that the next step for risk managers is to concentrate on the opportunities as much as they can.
If you haven’t registered yet, secure your place for the two-day seminar now via our registration page.
More information about the Seminar can be found here, with Philippe’s bio in the Speakers section.