CSR as (Social) Risk Management

Some thoughts on CSR and Risk management

Effective risk management has almost from the start of CSR been part of the reasons for engagement with stakeholders (Bebbington et al, 2007). Many companies have had NGO raise problems which companies did not even know existed or had any plan for how to tackle. In other cases the companies where attacked for business practices, which where part of their core business such as when City bank was under attack for lending money to project that lead to deforestation in Latin-America (Baron et al, 2004). Here stakeholder engagement becomes essential in order to keep the brand name undamaged and most important in keeping the trust that customers has put into the company intact. There are no single success formula on how to communicate effectively with stakeholder or which ones that should be heard or which can be ignored. What is important is that companies and organisations take a stand on how to make this communication work in practice; otherwise the risks can remain unseen for long periods until the day where it becomes unmanageable for the company and turns into a real crisis. As I have described have companies like Nike implemented systems that enable them to get a feeling for what is happening in the world and how there brand is perceived, and hopefully this system will give them some warning on cases soon to emerge.

Adopting a strategy of transparency have over time proven the best assurance for companies to manage their CSR risks and more and more companies are trying to create systems so that their stakeholders can see what they are doing. By looking at the growing number of members of GC it is clear that transnational companies from around the world are using transparency or at least what appears as transparent to manage social risk issues.

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