MISSION INTANGIBLE

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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Headline-Sourced Reputation Risk

C. HUYGENS - Wednesday, August 23, 2017
“We’re in the era of weaponized social media….Companies need to set clear expectations of what (behavior) is acceptable.”

“Companies need to communicate with stakeholders about the values embedded in their corporate culture and set clear expectations of what is acceptable and what is not. In the current political climate, companies should have been considering this question all along, not just waiting for (Charlottesville) to stimulate that discussion. ”

Read more in Business Insurance.

Reputation Risk Due to Ethical Controls Failure

C. HUYGENS - Monday, July 31, 2017
Germany's big three groups, Volkswagen, Daimler and BMW, and VW units Porsche and Audi have been accused of holding secret meetings and colluding on technology. There are controls to prevent such ethical breaches. How can they fail?

“German managers are less aware of the financial consequences of wrongdoing than their US counterparts,” she says. There is less of a recognition that fines imposed by regulators for lawbreaking “can sometimes be so big they can ruin the company”.

Read more in the Financial Times.

Ruthless Blame Game: From 2x4s to nuclear weapons

C. HUYGENS - Sunday, May 31, 2015
It's the CEO's fault, of course, reports Fortune Magazine. According to a survey of 200 Directors conducted by the New York Stock Exchange, more than 2 in 5 respondents said the CEOs should face the brunt of…breach-related backlash. The same seems to be true for any enterprise-level risk.

Damage the firm's reputation, and Directors can get very aggressive. It's no different than in the 1990's when Warren Buffet warned employees at Solomon that if they damaged "a shred" of the firm's reputation, he would be ruthless. Except it is different.

Today, investors are getting very aggressive. They are using enterprise-level disasters to indict the Board of Directors, and build the case that Proxy Access--the right to nominate directors without approval of the Board--is an essential strategic "weapon" to help focus the board's attention. Apparently, we've come a long way from needing merely a 2x4.

Read more (Fortune)

Citi: Opportunity for enterprise risk management grand slam

C. HUYGENS - Wednesday, September 03, 2014
Other than BNP Paribas, which is actively struggling with serious compliance issues and reputation damage, the large banks appear to be stabilizing. Jonathan Salem Baskin of Consensiv, writing for Forbes, notes that for a financial conglomerate such as Citi, stability is a misnomer -- its very essence is a conflict of narratives.

"Citi’s brand possesses at least four major attributes, by my accounting, and each comes with varying degrees of credibility and meaning: Evil lender, reward points-giver, 200 year-old company, and friend to small business. If it could express them as an integrated, coherent whole, it would be a branding grand slam."

The value of Citi's integrated coherent whole, that is to say, its reputational value, is much better than it has been in the past, but it is still relatively dynamic with at least around $14.3B in play (~10% of market cap) over the trailing twelve months.

"Figuring out how to weave together at least four of its brand attributes would be a grand slam," affirms Baskin. If it could transform that collective reputation into a stable source of value, it would be an enterprise risk management grand slam.


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