Category: Perspectives

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.

Canadian consumers are worried about data breaches, Navigator’s survey reveals, and they believe it’s time for government to act

A problem that began in the arcane world of online gaming back in 2011 has become one of the most challenging corporate issues of 2015.
In April 2011, hackers accessed the names, addresses and credit card data of 77 million users of the Sony PlayStation Network. Suddenly, the public became aware of the consequences of data breaches. Initially, Sony offered an apology and some free games to those affected. It ended up settling an international class action suit for about $20 million.
Most experts agree that the PlayStation breach was relatively minor in the context of what has happened since.
The protection of personal information has quickly emerged as one of the most complex legal issues and top-of-mind crises that companies face, whether the threat is hackers or human error. The situation is exacerbated by the multinational networks of partners, suppliers, vendors, customers and employees who have direct and indirect access to that information.
Under current privacy law, those collecting personal data are prohibited from distributing it without obtaining prior consent. The number and the scale of data breaches, however, may portend a shift towards much more explicit obligations to keep such data secure, and penalties for failing to do so.
Already, the pressure on governments to take action is on the rise and legislation is before Parliament in the form of Bill S-4, the Digital Privacy Act.
Navigator’s proprietary research (see previous article) indicates a growing intolerance for the status quo. An overwhelming number of Canadians indicate that much tougher laws and regulations are required to better protect consumers. Almost as many believe that data breaches will not be effectively dealt with until government and regulators impose much stricter policies and practices.
In the near term, it is reasonable to conclude that the political traction of this issue is likely to have a material impact on the purview of corporate general counsel.
It is the GC’s role to identify laws that apply to their employers’ operations and to ensure there is a rigorous compliance process in place. That means increased focus on internal information technology systems, as well as those of an array of business partners.

In the near term it is reasonable to conclude that the political traction of this issue is likely to have a material impact on the purview of corporate general counsel.

The search for compliance gaps will be increasingly difficult, given the global nature of information acquisition, use and storage. For example, Canada’s anti-spam laws place restrictions on Canadian companies but do not affect those who conduct business outside the country.
Another consideration is how the rules in key jurisdictions affect practices beyond their scope. In the case of the U.S. Sarbanes-Oxley Act of 2002 (also known as the Public Accounting Reform and Investor Protection Act and the Corporate and Auditing Accountability and Responsibility Act), new reporting requirements in the U.S. reverberated globally.
However these emerging trends play out, one thing is already certain: For companies of all sizes, there is an urgent need to plan for data breach crises and their steep reputational — and financial — costs in competitive markets. The widespread public expectation that business leaders will be fully prepared to contend with data breaches and their consequences is already well entrenched, according to Navigator’s research.
Of course, successfully managing those expectations is just one part of the data breach challenge.

John Ratchford is a Principal and General Counsel at Navigator. He has been a practising lawyer for over 19 years.

Political campaigns have become more sophisticated with the advent of technology and its application. One constant, however, is the importance of the campaign veterans who have loved, lost, won and lived to fight another day. Navigator Managing Principal, Randy Dawson, is one of the most seasoned — and most successful — campaigners in Canada

I worked on my first political campaign in 1978. I was 18 years old, and the candidate, Rollie Cook, was 26. He was seeking the provincial Progressive Conservative nomination in the newly created riding of Edmonton Glengarry.
In those days, there were no computers, no email, no cellphones. People still opened their doors if you knocked. And they answered their telephones when they rang. Lists were typed out on paper. And hundreds of volunteers came together to do the work.
Even 15 years ago, email and cellphones were just starting to become more common. Some computers were used for rudimentary list management, but when it came to targeting voters, we manually searched through books of census data, picked up land-line phones and knocked on doors.

We’ve gone from a 24-hour news cycle with CNN to a 24-second news cycle with Twitter. It’s not just the issue of speed trumping accuracy, but it makes it much more challenging to cover big, complex issues in a meaningful way.

Since then, however, the pace of change in political campaigns has accelerated rapidly.
Technology is the most obvious driver of that change. It’s now used to target voters and to constantly refine campaign strategy using data that’s collected on an ongoing basis through social media and the use of specialty software.
The application of advanced technology has significantly diminished the reliance on volunteers — although their retreat was already underway. In general, Canadians are not only busier, but the volunteer base is spread more thinly because more sectors than ever rely on volunteers.
Replacing those volunteers is an emergent professional management caste, specializing in voter mobilization. While many of these political experts reside within party organizations, the ranks of third-party contractors is also growing — a trend that’s migrating from the U.S. to Canada.
These professionals have become essential because of their specialized skill set and also because fixed election dates have extended the length of campaign preparation time. Instead of six months of campaigning ahead of an election, it’s more typically a year. And that’s more than most civilian volunteers could handle.
Financing is another aspect of traditional campaigning that has radically changed. The move from large, single donations to multiple individual contributions is partly a function of technology. Certain programs allow parties to narrowly target contributors based on the resonance of specific issues with their personal interests and beliefs. Financing has also changed because of new rules and attitudes.
Even where corporations are still free to contribute to campaigns, some companies consider political donations an unacceptable use of shareholder capital. The direct appeal for financial support from individuals gained momentum in Canada with the emergence of the Reform Party movement in the 1990s. Reformers had no established network, no big backers, no institutional framework. They had to learn how to raise money directly from supporters — and how to find those supporters. It was an innovation born of necessity.
Another key difference in campaigns is the role of media. Where 15 years ago we worried about media concentration, now the issue is extreme fragmentation. It’s hard to know whom you’re talking to or dealing with when you try to communicate your message. Then there’s the issue of speed. We’ve gone from a 24-hour news cycle with CNN to a 24-second news cycle with Twitter. It’s not just the issue of speed trumping accuracy; it makes it much more challenging to cover big, complex issues in a meaningful way.
In the end, politics and campaigns haven’t fundamentally changed in 15 years. There’s still a bus, there’s still a plane, there’s still a war room — though now everything is monitored around the clock.
Furthermore, today — as it was 15 years ago or three thousand years ago in the days of Cicero — the best way to reach voters is through direct personal contact. We may be doing that in new ways, but the reality is that people want to engage. And campaigns are all about finding the best ways to do just that.
Of the many campaigns I’ve worked on over the years, I have to say my absolute favourite was Jim Prentice’s 2003 federal Tory leadership campaign. It was a real underdog endeavour and we had to slog hard, constituency by constituency, dollar by dollar.
That said, the calibre of the people who stepped up to participate, especially at the convention, was absolutely remarkable. It really was an A-team.
It was all clearly chronicled in the convention coverage: the suspense, the momentum, the tension. In the end, we lost. But it was all redeemed by the fun, the excitement and the electricity.
This campaign is also my favourite because of the issue at its heart. The whole focus was on uniting the Conservative Party and putting an end to all the fighting that had been going on for too long.
In my mind, Jim Prentice came the closest to articulating a vision for a united party. And I have never lost sight of how special — and how important — that process was. And the legacy the debate created.

Changes in the way we use media and social media ensure that no campaign target is missed.

Over the past 15 years, both the media and the message in political campaigns have been driven by advanced communications technology and data analytics.
Partisan political advertising has evolved from crude mass marketing efforts roughly based on past voting behaviour to highly strategic, research-driven custom messages.
Fifteen years ago, the Internet was not yet a mainstream campaign tool. In the 2000 Canadian federal election, the websites of political parties and candidates were skeletal, disorganized and difficult to navigate. But campaigns were on the cusp of fundamental change. In the U.S., Al Gore’s 2000 presidential campaign deployed a progressive Internet team that began collecting email addresses of voters in order to craft more personalized messages. This marked the start of efforts to build voter profiles in order to deliver focused information that aligned closely with the recipient’s beliefs and behaviour.
Political advertising content also changed with technology. In the late 1980s and early 1990s, it relied on symbolic imagery or general footage of a party leader mingling with potential voters at Tim Hortons or on an assembly line.
Over time, political leaders have begun speaking directly to the camera and to viewers. As attention spans have decreased in the Internet age, so too has the length of traditional ads. From a full minute in the 1960s, television ads have become much briefer — some as short as 15 seconds. Online, however, spots may last closer to 90 seconds.
This change reflects a shift in viewing habits among the electorate. It used to be that everyone was glued to a TV set for specific hours every evening, and people watched things at particular times. With the extreme mobility of laptops, tablets and smart phones, people now expect the message to come to them, rather than the other way around.
While the cost to produce and distribute online political ads has fallen, parties are under pressure to produce and distribute them faster to capitalize on breaking news or to respond to events.
That means simple, low-cost videos have become the new normal. Within hours, campaign workers can produce timely web videos that build momentum by allowing the electorate to comment on and share them.
Furthermore, sophisticated research and data analytics make these ads more strategic and effective. The advent of Big Data allows campaigners to analyze viewer responses and patterns in real time, quickly identifying the issues and responses that resonate most. This insight is then used to create customized but mass scale messages for Twitter, Facebook and YouTube accounts.
In the information age, as never before, political campaigns prove that we shape our tools — and then they shape us.

Partisan political advertsing has evolved from crude mass marketing efforts roughly based on past voting behaviour, to highly strategic, research-driven custom messages.