The surge in social and political activism in recent years has finally become a recognized, formidable challenge in C-suites and Boardrooms of American business today. At the same time, there are still so many unknowns about this phenomenon – what is the key issue inspiring an activist initiative, what exactly is driving their actions, what form will the protest take, who are the principle activists, what kinds of outcomes can be expected, how will the company brand or reputation be effected, and finally what is the likelihood that your specific industry or business sector will be targeted.
Activism is about change. Most activist initiatives start with strong beliefs about what they perceive as fundamental wrongs that impact society negatively. Among the most common and severe causes include inequities such as the rights of women and civil/non-white populations (e.g. Black Lives Matter), sexual harassment, unethical and/or unfair behavior by companies and specific executives, and product or service performance that can irresponsibly endanger the safety or privacy of customers.
Validating Brand Risk Types By Industry Is Critical
While business leaders believe that every situation is different, especially with unexpected demands, they also admit that all these types of activist events can become a major risk to their brand integrity and business valuation. To clarify what is actually happening with activism trends, Marketing Scenario Analytica (MSA) has been monitoring and evaluating activism risk events over the past 3 years. Specifically, MSA has conducted an in-depth assessment of the frequency, nature and manifestation of these social/economic/political activist events in a recent sample month. A key finding helps to answer a critical question by executives: what is the likelihood of such an event happening to me, or to a peer in my business sector. And related to this, what type of risk event is most likely to occur – see chart below:
The empirical data from this research show that the types of industry most likely to be targeted by activists are primarily service oriented, which tend to be very visible and multi-customer oriented in our culture. Further, each service sector has certain unique attributes that will attract different causes or issues pushed by activists. Not surprisingly, technology faces activist protests mainly on information security and data privacy. Many of these technology companies have been developed and managed by bold, innovative managers who thrive on breaking the mold and testing societal limits, so risk exposures consistent with this managerial backdrop are likely.
New Demands Require New Solutions
This new world of unpredictable activism is dynamic and potentially confusing, primarily because there has been a general lack of hard data that can allow business leaders to better understand their vulnerabilities, prepare accordingly and even take proactive initiatives that reinforce a company’s brand values and help prevent such activist threats. MSA can provide important empirical information to help companies make smarter decisions and focus better on their biggest vulnerabilities, which will help managers avoid such catastrophic risks and strengthen their brand reputation.
To receive a copy of MSA’s risk event research, click here.