Tech Companies Changed Policies – Corporate Counsel

Tech companies changed policies. “(S)parking outsized emotional reactions, Kossovsky said,…are a hallmark of matters carrying serious reputational risks.”

Tech Companies Changed Policies

In recent weeks, a pair of major tech companies have made serious missteps in pursuit of revenue—and reaped a whirlwind of reputational damage…Unity Technologies informed game developers that they would have to pay monthly royalties for using its game engine. […] Zoom’s updated terms of service allowed it to use images, sound and other content from meetings to train artificial intelligence algorithms. […] “(S)parking outsized emotional reactions, Kossovsky said,…are a hallmark of matters carrying serious reputational risks.”

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“(S)parking outsized emotional reactions, Kossovsky said,…are a hallmark of matters carrying serious reputational risks.”

Corporate Counsel: September 22, 2023

Steel City Re’s strategic tools help risk managers build corporate resilience by predicting reputation risk, protecting enterprise value, and promoting risk management. We help risk managers manage risk and add value across Boardrooms, C-Suites, and operational silos through reputation resilience.

Reputation is Mission-Critical

Today’s sophisticated risk managers are strategic. They know that enterprise damage from reputation risks might be their greatest and longest lasting peril, so they monitor for red flags. They foster a culture that respects those warnings and facilitate processes to mitigate those risks. Their diligence strategically builds enterprise-wide resilience that informed stakeholders can appreciate.

The results of strategic reputation risk management are evident in reputation resilience. More than crisis recovery, they include customers buying, not boycotting; employees working, not fleeing; investors buying, not selling; lenders adjusting interest rates down, not up; regulators deferring, not enforcing; and social license holders acquiescing, not protesting.

Having a robust Reputation Resilience Program in place offers, amongst other benefits:

  • Protection for the company, its staff, executives, and board from litigation and regulatory challenges
  • Improved governance processes and better enterprise risk management protocols; i.e., measuring reputational risk
  • Establishment of an agile operating, communications, and decision-making team, with clear roles and responsibilities, trained and ready to handle all reputational threats; i.e., a reputation risk management framework
  • Proactive management of risks that could give rise to delays or derailing concerns around new product and strategic partnership launches
  • Captured behavioral economic value from stakeholders; i.e., value of reputation
  • Reduced costs of debt and risk transfer while boosting equity value; i.e., boosting reputational value

Tech companies changed policies.. A hazard of reputation risk is a lurking gap between stakeholder expectations and reality. Another hazard is the emotional intensity associated with expectations. The peril is anger from disappointed stakeholders. This video explains the behavioral economic features of the many perils of reputation risk.

Mitigating risk strategically through expectation management and operational adjustments evinces thoughtful management and dutiful governance. Financing such risks evinces prudence, and doing so publicly enables stakeholders to appreciate and value the effort.

One Question

ESG-linked reputation risks are prevalent and material. Is promoting the quality of your risk management program part of your strategy?