Month: November 2015

After years as the near-exclusive purview of analysts, actuaries and auditors, the global financial crisis propelled risk to the top of the broader corporate agenda. Seemingly overnight, every board wanted expert directors, and the language of business became peppered with beta analysis, fiduciary liability, hold-harmless agreements, mitigation strategies and probability.

Risk, of course, is nothing new to companies or their leaders. Neither is the drive to manage it. But the spectrum of risk encountered in the normal course of business—especially in global markets—is more vast than ever. And the global financial crisis shone a particularly bright light into its every nook and cranny.

But for all the attention that risk management has recently attracted, there continues to be a singular gap in the prevailing approaches: the failure to fully integrate communication strategies at the outset.

Whether a company is trying to contend with a dramatic political shift, manage investor expectations, attain social licence or mitigate a data breach, a comprehensive communications plan is imperative. It’s all the more important in the age of social media, when valuable corporate relationships and brands that have been burnished for years are squandered in seconds.

Once compromised, trust and reputation can be extremely difficult to reclaim. Furthermore, in an intensely competitive global marketplace fuelled by information technology, a temporary setback can be instantly transformed into a permanent advantage for rival firms.

Even the most resolute skeptic can quantify the cost of inadequate communication to a company’s bottom line. A collapse of confidence swiftly translates into a dive in share price and an increase in the cost of raising capital. Failure to connect with stakeholders and win social licence to proceed with a project can add millions of dollars to a budget. An unmitigated data breach can mean the enduring loss of business and, in the worst cases, expensive liability.

After more than 15 years in the field of high-stakes communication, Navigator has frequently supported clients on the frontlines of risk mismanagement. Over that time, the need to respond quickly and with assurance has increased exponentially. The cost of striking the wrong note, conveying confusion or failing to respond has also increased significantly.

In the end, the ultimate tools in managing modern risk are surprisingly old-fashioned: be prepared, listen to others, respond and adapt to change, tell your story, communicate your intent. Aggregate all of that in a strategic communications plan.

In this issue of Perspectives, the Navigator team has pulled together some of our current thinking on risk management and the tactics—from research and strategic stakeholder engagement to governance—that help companies take the lead in dealing with the variables and vagaries of daily business.

As always, we hope our views provoke some thought and, even better, some feedback.

Managing risk has always been a big part of the oil and gas business. One new strategy? Tapping into the spirit—and ingenuity—that made it great in the first place.

A large sign on the outskirts of Calgary reads ‘Welcome to Calgary, Heart of the New West.’ In the past year, that heart has taken quite a pounding.
In that time, oil prices, political dynasties, employment numbers and a whole lot ofassumptions have crashed in Alberta. If there is one certainty left in this time of uncertainty, it’s that things in the province—and the New West—have fundamentallyand permanently shifted. This isn’t just another post-boom bust.
For the past decade, job growth and economic development among the New West Partners—Alberta, Saskatchewan and British Columbia—seemed limitless. Canadians from across the country were drawn there by strong demand and soaring wages.
A year into the world oil price collapse, however, layoffs are the new normal. And that’s expected to endure as public and private sectors struggle to cut costs, reduce debt and grapple with the inevitable bloat of prolonged prosperity.
But while Alberta and, to a lesser degree, Saskatchewan, are reeling from an abruptreversal of fortunes, British Columbia is still holding its own.

To be fair, B.C. is less reliant on oil and gas revenues. Still, there are other significant differences. First, the province has ensured sustainable growth by collaborating with First Nations, securing their support for a number of new projects. Second, a policy of proactive environmental stewardship has limited some of the variables that can derail mega-project development. It has also helped position B.C. as a socially responsible resource supplier, something that is an increasingly important selling point, internationally.
Another change in the New West is on the political front.
A year ago, Saskatchewan, Alberta and British Columbia were closely aligned politically. The recent election of an NDP government in Alberta has altered that dynamic, adding a new degree of uncertainty to established relations among the three governments.
The future of that New West Partnership is no longer assured, despite the fact that Alberta’s government has moved forward with care. It has not yet presented a budget, defined its environmental approach, nor detailed its energy royalty framework. Arguably, it is the uncertainty created by that vacuum that poses the greatest threat to the Alberta economy and the partnership itself.

“Working strategically with governments on R&D and other initiatives is another way to mitigate and manage related risk.

Will W. Stewart: When I think of Western Canada I think of natural beauty in wide-open spaces, pristine wilderness, boundless economic prosperity, and the future of Canada’s national and international success. Western Canada’s future is all of Canada’s future.

Randi Rahamim: When I think about Western Canada I think about change—vast opportunity, economic shifts, and political volatility. Western Canada is resource rich, and is front of the line in dealing with fluctuating oil prices and environmental progress.