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*
Respect your customers;
*
Support vulnerable customers;
*
Seek potential customers within excluded groups;
*
Actively manage responsibility in your supply chain;
*
Treat suppliers as partners; and
*
Work with the rule makers.
*
Their key recommendations for management actions are:

* Put the principles at the heart of business strategy and make it part of
the culture;
* Aim to provide quality results;
Chapter 10 “ Corporate power, business and marketing risks 245




* Anticipate trends;
* Encourage and motivate responsible behaviour;
* Have consistency of message; and
* Share best practice within the business.
You can find an extended explanation from the download at: www.bitc.
org.uk/marketplaceprinciples



Trends
Independent research commissioned by GreenPortfolio, entitled, ˜Green rela-
tions: the communication viewpoint™ (available from: http://www.greenportfolio.
co.uk/index.html), reveals that being green is rapidly becoming a marketing
˜must™, with 58% of marketing and PR professionals believing this provides
competitive advantage. UK organisations interviewed believe customers are
prepared to pay more for environmentally friendly products and services.
Despite these findings, nearly three out of four (72%) companies have no
green marketing plans in place and only one in three (33%) has senior manage-
ment buy-in when it comes to going green.
There is an increase in award schemes that are highlighting these best prac-
tices, such as the Green Awards for sustainability communications (www.
greenawards.co.uk) aimed at rewarding marketing campaigns that best commu-
nicate the importance of sustainable development and responsible business
practices to consumers (see Chapter 11 for examples and case studies).
Companies, including those referred to below, have already started to
improve the links between marketing and sustainability and CSR, with impres-
sive results:
According to Marks & Spencer™s corporate responsibility chief Mike Barry,
the company™s ˜Look behind the label™ marketing campaign has been their
most successful ever;
Barclays won a best corporate communications using video for its training
film which aims to challenge entrenched attitudes towards disability in the
workplace;
BT won an award for best sustainability communications using interactive
media. Players of its web-based game, the ˜BT Better Business Game™, are
invited to run a fictional company, trying to keep stakeholders happy
throughout a string of management dilemmas;
Honda has won awards for its advertising campaign and slogan ˜Hate some-
thing, change something, make something better™ for the promotion of the
cleaner, quieter diesel engine used in the Accord I-CTDI;
Kraft scooped a prize for best strategic communications for its Kenco sustain-
able development coffee brand. Developed with the Rainforest Alliance, the
product was praised for challenging consumers to compare it with other
mainstream coffees;
Part B “ Overview of the Economic Aspects of Business Risks
246



Toyota was recognised for a series of advertisements for its hybrid vehicle,
the Prius. The commercials aimed to explain that hybrids are not only about
fuel efficiency but also about cleaner air;
Procter & Gamble™s ˜Turn to 30™ campaign, which encourages consumers to
wash clothes at lower temperatures;
Levi Strauss Europe has become the first major denim label to launch a sus-
tainable brand of jeans. Levi™s Eco jeans are made from 100% organic cotton.
But it is not only the denim that is certified as sustainable. Buttons come
from coconut shell, and dye-finishes are made from natural substances such
as potato starch, mimosa flowers and Marseille soap. Even the tag is made
from recycled paper and printed in soya ink; and
The iPod Nano (Product) Red from Apple Computers (US) has joined the
Product Red campaign “ a cause related marketing effort to help fight AIDS,
which means that approximately 5% of every sale goes to the Global Fund for
AIDS, Tuberculosis and Malaria (www.joinred.com).


Useful web links
An IFC report entitled: Stakeholder Engagement: A Good Practice Handbook
for Companies Doing Business in Emerging Markets was released May 2007:
http://www.ifc.org/ifcext/enviro.nsf/Content/Publications_GoodPractice
11
Information technology (IT) and
e-commerce: issues of risk
management and corporate
governance
Information technology (IT)
11 and e-commerce: issues of risk
management and corporate
governance

CHAPTER OVERVIEW
Issues of risk management and corporate governance have various dimen-
sions and impacts depending upon whether the organisation uses technol-
ogy as a tool or deals with the risks through its supply chain. Whichever is
the case there is no doubt that the choice of and reliance upon technology
and IT in particular has become increasingly critical. Moreover it can
represent a core ingredient of the organisation™s risk management and
exposure. For example, as the global economy continues to reel from the
corporate scandals, organisations also have to cope with a stringent new
regulatory framework. This era is often described as the ˜New Economy™.
There are some brief overviews of new technologies and the risk
implications are explored at the start of the chapter; then a framework for
evaluating liability issues is presented. The main case study is the impact
of information communications technology (ICT) upon organisations,
although other chapters cover aspects of technological changes as the dis-
cussions in Chapter 3 on trends and drivers demonstrate.




Use of new technology risk
Research and analysis results indicate that:
Use of new technology risk is 0.4% of market value of the top 500 EU and US
companies; and
This risk exposure has been reduced from 0.5% of market value by good risk
management techniques (the risk reduction/management factor).
The potential opportunities are of course large, but in terms of general risk
management companies should aim to provide the following as examples of
good practice:
Effective communications;
Robust product trials;
Chapter 11 “ Information technology (IT) and e-commerce 249



Good security; and
Safety guarantees.
The graph below shows the use of new technology risk by sector.
New Technology
1.0%

0.9%
STEEL & OTHER METALS
0.8%
AEROSPACE & DEFENCE
0.7%
Net (Residual) Risk




OIL & GAS
0.6%
CONSTRUCTION & BLDG
MATERIALS
0.5%
BANKS
0.4%
FOOD & DRUG RETAILERS
0.3%
SECTORS
0.2%
FTSE 350 AVERAGE
0.1%

0.0%
0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4%
Gross (Inherent) Risk

Technology is more than the creation of new products and processes, it
now has the power to transform our society and can take our development dra-
matically forward or backwards. An example of this is the internet and infor-
mation technology which we will review as one of the main case studies of risk
in this section. The benefits of new technologies are often slow to become
apparent, as are the risks in comparison to the speed of their implementation.

Technology is a broad term dealing with the use and knowledge of human-
ity™s tools and crafts. It refers to those tools that are used to produce the
goods and services of organisations, but is not exclusively concerned with
information or communication technologies, although that is our primary
focus in this chapter. The following distinctions can be made:
* Science is the process of investigating natural phenomena. It produces
information and knowledge about the world; whilst
* Engineering is a goal-orientated process of designing and building tools
and systems to exploit natural phenomena for a practical human means;
and
* Technology is the consequence of these two processes and societal
requests. The term technology is often used as the name for all engineer-
ing products.
Part B “ Overview of the Economic Aspects of Business Risk
250



The pace of change
The rapidity of change and therefore of new risks materialising is phenomenal.
What we as a society achieve in a day today used to take a year for many activ-
ities: in a day we send what was a year™s worth of email traffic only 10 years
ago; a whole year™s foreign exchange dealing in the 1970s and 1980s is now a
daily trade volume; we can achieve what used to be a whole year™s scientific
research in a day now with the aid of new supercomputers. The risks and
opportunities of the new technologies like information communications tech-
nologies (ICT) are staggering. It is estimated that the information we receive is
doubling every five years (from New Working Habits for a Radically Changing
World, Pritchett, P., London Pritchett and Associates Inc. (1996)).
Another analogy is that of the potato chip vs the computer chip, as since
1948 potato-based products have:

Remained the same size and have the same functionality, but the price has
increased 19-fold.

In the same time scale silicon chip-based products have:

Decreased in size by a factor of 2 million, price vs power also decreased by a
factor of 2 million and functionality has increased by over 300 million.


Risk management
There are positive examples of the business opportunities afforded by new
technologies and how these can simultaneously benefit society. As well as
the commonly touted examples of medical technologies, renewable energy,
hybrid cars and fuel cells, there are opportunities for innovations in older prod-
ucts and scientific research into products to reduce product liabilities in the
future.
The most common examples of how technology can assist us reduce risk
are unlikely to be the ones that do so in the future. The true nature of inventions
and innovations, and their applicability to human societies, is rarely apparent
at the time of creation. With regards to measurable risk management potential
some clear trends are apparent though. An example, in which the aims of busi-
nesses and society are the same, is the use of technology to improve resource
efficiency. The ability to produce more items with fewer resources, to become
more efficient, economically and environmentally, is beneficial to all, or as
Peter Schwartz of the Global Business Network noted in 2003:

In effect, every industrial society enters a race between the rising use of materials and
energy and the growing efficiency and effectiveness of its technology. Over time, effi-
ciency and effectiveness tend to win ¦ at that moment, society as a whole takes a definite
tilt toward greenness (in Inevitable Surprises: Thinking Ahead in Time of Turbulence.
Schwartz, Peter. Gotham Books, 2003).
Chapter 11 “ Information technology (IT) and e-commerce 251



Examples of the use of science, engineering and technology (referred to here as
technology) to reduce risk include the:

Development of new products and services, as well as associated processes:
An example is that Xerox Research Centre of Canada and PARC (Palo Alto
Research Center Inc.) scientists have invented an ˜erasable paper™ whose
images last only a day, so that the paper can be used again and again. The
technology could ultimately lead to a significant reduction in paper use as
two out of every five pages printed in the office are for a single viewing;
Improvement and evaluation of existing products and services.
Enabling of communication technologies that allow for the improvement of
other processes and systems, i.e. teleconferences can reduce the need for
travel and speed up organisational communications;
Selection of technologies and processes that support sustainable personnel
and organisational learning and development;
Improvement of communications externally as well as internally, allowing
the views of stakeholders to be obtained and processed a lot quicker, i.e. cus-
tomer feedback and complaints can be dealt with more promptly leading to
improved quality of offering in the long term;
Human resources functions can be improved with computer-assisted recruit-
ment, employee reward and recognition, skill and career development analy-
sis and improved internal marketing and communications systems; and
Technology can have benefits for reducing environmental impacts and
improving assessment processes. An example is that emails and electronic

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