The situation faced by BP as the oil spill in the Gulf of Mexico ran on for weeks with increasing amounts of pollution washing ashore was a collapse of its reputation due to operational failures in the original oil rig accident and the subsequent cleanup effort.
The stock price plunged as the oil producer, which can trace its origins back to 1908, faced a battery of legal and liability claims that threatened to empty even its very deep pockets.
Companies sometimes have to adopt massive and costly measures to stem the threat of reputational risk. In late 2009 and early 2010, Toyota had to recall some 9 million vehicles after a number of fatal accidents were attributed to unintended acceleration. The auto giant also had to suspend sales of several models while fixing the problems.
Banks, the quintessential managers of risk, have wrestled with the problem of how to measure reputational risk and how to safeguard against it. Many banks consider it an effect of failures in the three major risk categories – credit risk, market risk, and operational risk, says staff writer David Benyon in a specialist publication on bank risk management.
But operational risk itself was considered impossible to measure just a decade ago, Benyon adds, so that some risk managers anticipate an evolution in assessing and managing reputational risk.
Goldman Sachs acknowledged the issue in a filing earlier this year with the Securities and Exchange Commission after a spate of negative publicity about its actions in selling the mortgage-backed securities blamed for causing the 2008-09 financial crisis.
The “adverse publicity … can also have a negative impact on our reputation and on the morale and performance of our employees, which could adversely affect our businesses and results of operations,” Goldman said in the filing.
The Spanish bank Santander spent an estimated 500 million euros in early 2009 to make good the losses by investors in one of its funds that placed money with Bernie Madoff, an investment manager who pleaded guilty to running a Ponzi scheme that led to investor losses of some $50 billion altogether.
Sometimes these efforts fall short and lead to the company’s demise, as was the case with Enron and Andersen. In June 2010, the security firm Blackwater put itself up for sale after various efforts to repair damage to its reputation from actions in Iraq were unsuccessful.
A roundtable discussion at the Association of Insurance and Risk Managers in April found that risk managers overwhelmingly agree that reputational risk is important to their organizations, but only 6% felt they were leaders in this field.
While Toyota seemed on the road to recovery after its decisive action, the eventual fates of BP and Goldman Sachs remained to be determined in mid-2010. What was certain is that corporate risk managers will be paying more attention to reputational risk.
“Why chatter matters,” by David Benyon,OpRisk & Compliance, January 2010.
“A good name? Priceless,” Strategic Risk, April 1, 2010
According to the Times, BP said that its costs for the oil spill in the Gulf of Mexico spill have reached $1.25 billion (£870 million) as it set out plans to place a second cap on the leak. Further, as of 1 June, BP’s shares had fallen by 13%, as reported by the BBC. It has lost nearly a third of its value since the Deepwater Horizon blowout on 20 April.
There is no doubt that the sheer severity of the Gulf catastrophe has had a monumental effect on the reputation of BP, justly or not, and the financial cost will be staggering. But with perception being reality, how much has the ‘perception’ of BP’s response contributed to the financial accounts?
BP’s engineers, along with countless others from several agencies, have worked tirelessly to stem the oil flow, yet still they are seen as the culprits, while the US government and its loose legislative approach to oil drilling in the area, Haliburton, responsible for the mechanical upkeep of systems that failed, and Transocean, the drilling company hired by BP, largely avoid the ire of the public. BP’s response has been massive, practically and financially, yet their efforts are all painted against the blame which is thrown at them.
The fact that public anger is concentrated on BP, and not others, may have something to do with the media response they put forward. It terms of crisis communications they have acted quickly and succinctly, as can be seen from their online work. But their words, coming from their spokesperson of choice, CEO Tony Hayward, have acted as a magnet for anger and distrust, not sympathy and understanding. And the question, albeit unquantifiable, must be raised: how much has the performance of Hayward in the media contributed to the financial hammer blow? 1%, 5%, 10% (even at 1% we’re taking lots of zeros)
It is ironic that Tony Hayward, a very capable CEO, has always been known for his aggressive approach to maintaining and raising safety standards. His experience in the field of oil exploration and the industry as a whole is (or should be) beyond reproach. But all that counts for little when dealing with a vengeful media, encouraged by a public baying for blood, feeding a crisis maelstrom.
The cleverest, most capable, experienced, sensible, respected, even honest, CEO is never necessarilycapable of dealing with a media storm. Such circumstances tend to be way outside their comfort zone, in an environment normally way out of their control. The angel of the boardroom may be adept at managing people, resources, time, finances and the market, but without considerable forethought, experience, and training in dealing with the media these management attributes will count for little, and may cost a lot.
Hayward has been castigated for his performance in the media – from wanting his life back, when 11 were killed in the initial tragedy, to claiming that the ocean is very big, when to locals that’s not quite the point. There are many other examples, in which Hayward has added (excuse the pun) fuel to the fire.
CB3, having looked into Hayward’s background and career, has no doubt over the honourable intentions of BP’s Chief, but if CEOs, senior managers, subject matter experts and spokespeople are ever going to face the media under such an onslaught, preparation, practice, mentoring and extensive training are utterly vital. Working your message (assuming you know what it is), reconnecting during interview, handing tangential issues, subtle bridging, persuasive techniques, linguistic dexterity – these are all cerebral actions which must be almost second-nature during the sparring of a harsh media interview, manifesting itself in a rapid mental obstacle course. Speaking confidently at the annual AGM, providing lively and humourous dinner party chat amongst other titans of industry, eloquently arguing your case in the boardroom – all good and well, but such attributes, whilst handy, will not enable the dynamics, strategy and tactics required of a crisis media interview (or any media interview, come to that). It is a different ball game, in a different ball park, in a different country.
In defending one’s reputation during a crisis, being seen to do the right thing is crucial but as Hayward has shown, words spoken in the media during a crisis can be very, very expensive, immediately and for a long time afterwards.
With recent claims from several quarters of the dangers of aid being mixed with military operations and the UK’s coalition government, currently putting DfID through a thorough review, dallying (or not) with bringing the two closer together, it is perhaps worthwhile spending a little time looking back at the short, but important, history of ‘military humanitarianism’.
The words neutrality, impartiality, independence and humanity pepper the pages of the manifestos, mandates and remits of humanitarian organizations and the volumes of academic and government discourse on humanitarianism. Yet, since the debacle of Rwanda in 1994, these classical core values have been under threat from a political ideal, that of ‘new humanitarianism’ which focuses upon a rights-based approach, as opposed to a needs-based one, is oriented towards long-term political goals of ‘liberal peace’, places humanitarianism within the ‘grey zone’ of a relief-development continuum, and is increasingly crowded with, supposedly integrated, political actors as it develops into a serious facet of international relations. The Kosovo crisis exemplified, both good and bad, the practical manifestation of ‘new humanitarianism’, but it remains a feature of contemporary humanitarian relief operations.
However, the post-9/11 environment has encouraged the militarization of ‘new humanitarianism’ towards political and security objectives, further straining the core tenets of humanitarianism.
Three major themes can be identified. Firstly, the public perception of the threat has changed, which has affected donorship; secondly, there came the ramifications of a new strand of political imperative, namely anti-terrorism and, thirdly, due to the nature of high profile conflicts, the conditions on the ground for humanitarian actors have been transformed, notably through the severe impact upon perceptions of neutrality and the hazards entailed.
Generated by a sudden sense of threat, donations to appeals for humanitarian crises were curtailed post 9/11, especially in the US, because of the notion that such funds were in effect aiding populations in which a threat resided. Further, the US Agency for International Development (USAID) sponsored the idea that the work of the US administration and humanitarian NGOs together ‘is now perceived to affect the national survival of the US’. Donor security in the minds of the US administration and the public became enmeshed with humanitarianism, encouraging a degree of selectivity as to where or not such aid should be disbursed and consideration of conditionality if seen necessary to bolster that security. Development aid has suffered a similar conflation.
US foreign policy, being at the forefront of the counter-terrorist agenda, dominated the foreign policy concerns of the West in general and therefore, to varying degrees, the humanitarian stance of the leading global donors. Policy focused upon the threat of terrorism. Like Kosovo, the promoters of major conflicts in this war, both the US and Atlanticist Europeans, have not shied from employing a humanitarian raison d’etre, mixing a political crisis with a supposed humanitarian one, motivated by political necessity
But the ‘with us or against us’ approach of such policy has taken the politicization of humanitarian aid, and the overt acknowledgement of it, to new heights. Impartiality has long been under threat as the aid figures from the mid-to-late 1990s have demonstrated, indicating a strategic skew away from what might be termed ‘forgotten crises’, representing something of a dual-track composed of strategically important crises and those less so. The very basis of the political imperative, centred on direct threats, has maintained such a strategic skew although shifting policy focus to new zones. This has had further profound implications for humanitarianism, not least for the basic tenets of neutrality and independence.
Afghanistan had long been seen as a protracted humanitarian crisis and therefore the humanitarian imperative could be more easily dovetailed into the political and military response to 9/11. However, Iraq was much more contentious, with neutrality being compromised early on in the lead up to its invasion. Many major NGOs, especially European ones, stated their opposition to the forthcoming war, their spokespersons not only commenting upon possible humanitarian scenarios but also their stance towards military action. The historical tendency for US NGOs mostly to align themselves with the incumbent administration reduced such an anti-war tendency but was indicative of their already lower levels of neutrality. The Europeans had shown that they could support military intervention on humanitarian grounds (see page 23) but their stance over Iraq illustrated their resistance to the conforming of humanitarianism to a political agenda. However, the availability of massive aid funds and contracts after the war’s end resulted in a reverse swing in terms of effective, or perceived, allegiance. While many NGOs, including US ones, initially declared their unwillingness to receive Coalition funds for work in Iraq, many eventually agreed to accept such ‘partisan’ resources. As such, in Afghanistan and Iraq, many NGOs are no longer seen as independent agencies but rather as subcontractors or, as Colin Powell claimed, ‘force multipliers’, in the humanitarian field. This perception enhances the notion of the privatization and militarization of humanitarianism.
The counter-terrorism agenda has raised further some significant questions regarding humanitarian policy. Many decry the merging of humanitarian policy with international security policy, even though it has been largely recognized that development and security are intertwined, with the former suffering due to a lack of the latter. But the new post 9/11 security environment has led to a much wider interpretation, leading to accusations that the humanitarian motives of donor governments and institutions have been hijacked by the underlying needs of their political and security agendas.
The post 9/11 environment has further encouraged the drive, apparent since the late 1990s, towards an integrated approach to crises, exemplified by the UN’s Brahimi Report of 2000 which formalized a coherent approach to crisis management, endorsing the ‘integration agenda’ whereby diplomatic, military, political and humanitarian elements would work to meet the same objectives. Further, the use of force, or even a benign military involvement in crisis response, has raised the spectre of humanitarian agencies operating, or being perceived to operate, alongside belligerents, with obvious concerns arising over the security of those humanitarian agencies.
Western governments that are involved in the war on terror agenda are also the main financiers of humanitarian funds. In this they do have leverage over humanitarian agencies and NGOs, which, at bottom, are resource-driven and compelled to search for funds, and to a degree over humanitarian policy.
Whereas Kosovo exhibited ‘new humanitarianism’ employing extensive military means, the last decade’s counter-terror agenda has been claimed as the harbinger of true ‘military humanitarianism’, on the back of political and security concerns.
Of note is the fact that while discourse around the subject of military humanitarianism was energetic during the first few years of this millenium, sparked by Iraq and Afghanistan, that conversation has waned over the last few years. But a quick examination of ongoing conflicts involving both military and humanitarian activities reveals that ‘military humanitarianism’ continues, for good and bad.
 http://hwproject.tufts.edu/new/pdf/minear-arden.pfd , p. 4.
 Andrew Natsios, USAID administrator, cited in Stoddard, A. Humanitarian NGOs: Challenges and Trends London: Humanitarian Policy Group (Overseas Development Institute), July 2003, p. 5.
 Rieff, D. A Bed for the Night: Humanitarianism in Crisis London: Vintage, 2002, pp. 234-5.
 ‘And I want you to know that I have made it clear to my staff here and to all our ambassadors around the world that I am serious about making sure we have the best relationship with the NGOs who are such a force multiplier for us, such an important part of our combat team.’ US Secretary of State, Colin Powell, 26 October 2001.
 Nickolls, J. Limits to Neutrality in Iraq Humanitarian Exchange No 25, December 2003. (pp. 7-9)
 Duffield, M. Global Governance and the New Wars London: Zed Books, 2001.
Conflict Prevention in the Multimedia Age
3-5 June, Bonn/Germany
Deutsche Welle Global Media Forum
The conference secretariat is busily finalising content and organisational matters – as you can see in the attached programme overview we have about 45 panels and workshops lined up so far. In terms of content the number of events has nearly tripled compared to last year. A topical overview is online available here
Javier Solana, High Representative for the Common Foreign and Security Policy, Secretary-General of the Council of the European Union will open the conference (tbc), Ramtane Lamamra, Commissioner for Peace and Security of the African Union has also agreed to join. Moreover we have lined up a number of German politicians and we are still waiting for a decision of the German Chancellor Angela Merkel. We also have asked the Jordanian queen and some other international political VIPs who have not yet confirmed.
In terms of content experts and speakers it looks better and better nearly on a daily basis. Just two colleagues who have agreed to join recently are Howard Rheingold, the Internet visionary and Brian Storm, multimedia guru from New York . Ahmed Salim, CEO A24 Media has also agreed to come. We have started publishing all those names on our website.
An attractive evening programme will give you a chance to enjoy the scenery of the Rhine river and the hospitability typical for this German region.
Partners include (in no special order): German Armed Forces, Stanford University, Reuters, University of Saarbrücken, University of Melbourne, Eyes and Ears of Europe, Intermedia, FoeBud, Chaos Computer Club, Radio Nederland, Media21, Konrad Adenauer Foundation, Committee for the Protection of Journalists, InWEnt, Commonwealth Broadcasting Organisation, FiFF, Interdisc. Fora RWTH, GPACC, SIGNIS, Friedrich Ebert Foundation , DART Centre, n-ost, Thomson Reuters, Oxford University, OECD, UNHCR, Nokia Siemens Networks, IPI, Asia-Pacific Broadcasting Union, EBU, Zurich University of Applied Sciences
The conference is generously supported by the German Foreign Office, the Foundation for International Dialogue of the savings bank in Bonn , the State Government of North-Rhine Westphalia, the City of Bonn and DHL
Contact / Conference Secretariat:
DW – MEDIA SERVICES GmbH
53113 Bonn , Germany
P +49.228.429-2142 (Press inquiries: +49.228.429-2148)
With regard to strategic communication, a common sentiment at development, strategy, foreign policy and political conferences is that “we all know it’s not working”.
Such attitudes often spark ideas on how to make communications contribute more to foreign policy objectives, but all too often these approaches suggest changes at the tactical level, without recourse to the core of the problem; that of understanding at the strategic level.
Over the last two decades, the corporate world has recognised the rapid evolution of the information environment. As a result, public relations (as opposed to pure marketing and advertising) has made an upward transition into the boardroom, has become part of the dominant coalition. In other words, the corporate world has come to understand the nature and importance of strategic communications, harnessing its power at the core of business and having communications contribute directly to corporate objectives. This paradigm shift has not ameliorated all ills, but communications is no longer an afterthought, no longer a ‘bolt on’ at the end of the policy process. It has gone mainstream.
In the area of foreign policy, notably crisis management and post-conflict reconstruction, this culture shift is moving at a glacial rate. Currently, in the higher echelons of foreign ministries, defence departments and development agencies, communications remains a ‘bolt-on’, despite the sterling work of many working on influence, information operations, public affairs and public diplomacy.
This lamentable position is maintained largely through a lack of understanding. Many still see communications through an industrial warfare lens, from a pre-information age viewpoint, when communications entailed either getting the spokesperson in front of a camera or conducting a solid bit of psychological operations (Psyops) or propaganda against an enemy. As mission critical as many see communications, through its ability to explain, justify, persuade, influence, understand and inform, and its capacity to win ‘hearts and minds’ or ‘capture the will of the people’, contemporary guiding philosophies and methodologies espoused by senior planners are often outmoded. As General Rupert Smith states, ‘capturing the will of the people is a very clear and basic concept, yet one that is either misunderstood or ignored by political and military establishments around the world’.
When considering the poor performance of communications, many examples of failings from the fields of Afghanistan to the mountains of Kosovo to the streets of the DRC, can be cited. In the asymmetric warfare of Afghanistan, with regard to the information battleground, it is the modern ‘Western’ force which is the weaker, while the Taliban possesses the superior communication ‘firepower’. It is little wonder that some senior Commanders are stressing that interventions must be treated as entire information campaigns in this new type of conflict; post-industrial war. And that also requires a deeper understanding of the role of strategic communications in this new conflict, both during and after.
Of course, there have been successes. The EU Police Mission in Bosnia-Hercegovina (EUPM) has successfully used modern media tactics to discourage crime; in 2001 a popular soap opera on BBC’s Pashtun service was instrumental in the success of a massive UNICEF inoculation campaign in Afghanistan, dealing with seven million children in just three weeks; the success of the ‘Kimberley Process’ is in no small part due to highly successful lobbying by development NGOs; Psyops were seen as a major factor in the rapid collapse of the Iraqi military in 2003; in 2000, the UK’s use of force, posture and profile certainly persuaded the RUF to stay away from Freetown, Sierra Leone; Oxfam, Save the Children and Médecins sans Frontières (and many others) can all point to successful campaigns to educate populations in war-ravaged countries. Although these successes tend to be the exceptions and mostly of tactical significance, the list does serve to illustrate the wide spectrum of and complex environment in which communications now feature.
In light of this new operating environment, a full review of the use of communications in war, crisis management and post conflict reconstruction is way overdue. As all communication professionals know, effective communication strategies are holistic, multi-spectral, multi-layered, internal and external, with multiple audiences and agencies, both domestic and foreign – in short, strategic. Strategic communications is an all pervasive concept: distillation of one’s own raison d’être; direct contribution to strategic guidance; internal communication; dialogical conversations; public diplomacy; boundary-spanning; social psychology; issue management; behavioural dynamics; stakeholder engagement; lobbying; narrative construction and publics analysis. The need to understand this concept at the highest level is becoming ever more crucial in the increasingly complex environments of foreign policy crisis management and post-conflict reconstruction. With this understanding will come the enablers, at all levels, that will allow comprehensive and effective strategic communication. It will go mainstream.
Yes, we need more resources. Yes, we need more coordination. Yes, we need better trained people. But let’s not fool ourselves into thinking that merely calling for these will bring about change. Equally, let’s not be so naïve as to think that by merely getting more resources, coordination and people that we will suddenly have sorted out the strategic communication malaise. The solutions lie deeper, in a sound and concrete understanding of what strategic communication is and what it can deliver.
If strategic communication is to contribute fully to the objectives of crisis management and post-conflict reconstruction, it firstly needs to be communicated to, and fully understood by, those who can bring about the paradigm shift. Attitudes and understanding are changing slowly but the most critical battle for ‘hearts and minds’ will not be fought in the fields of Afghanistan, the mountains of Kosovo or the streets of the DRC, but in the corridors of power of foreign ministries, defence departments and development agencies.