Debate over the private sector's role in the development of social policy has encouraged risk and in...
Debate over the private sector's role in the development of social policy has encouraged risk and insurance firm Marsh Risk Consulting to develop a governance model designed to help company's address social and ethical accountability.
The model, known as [email protected], gives boards a platform for responding to evolving social responsibility and ethical issues of concern to stakeholders.
Marsh managing consultant David Abrahams says a company's reputation may be at risk if its leadership is unprepared to deal with a changing set of non-financial expectations of its investors and other stakeholders.
"Today's ceo faces pressure to respond on social, ethical and environmental matters from a variety of opinion formers and stakeholders, both inside and outside the company. Sometimes even the demands of shareholders may be in apparent conflict."
This means ceos must not only attempt to satisfy all non-shareholding parties with an interest in the company's stated values and conduct, they must also ensure that their approach to identifying and managing social and ethical risk is efficient, transparent and financially responsible, Abrahams says.
Marsh's approach to social and ethical risk management extends the scope of the corporate governance framework, and is designed to help boards make sense of a company's reputation exposure in complex situations.
While accommodating formal measures of stakeholder performance from other sources as appropriate, the model also can help to promote wider employee appreciation of the company's social and ethical position and its commitment to protect and enhance its reputation.
"Boards and their corporate governance committees often lack a basis upon which to navigate efficiently through the wide range of social, ethical and reputation issues they must acknowledge and act upon," Abrahams says.
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