20-20 hindsight is a great thing…

Bear with me on this, because the fallout from this dinner is a great crisis, business ethics and risk management case study.

Case study scenario: Bosses of company X are invited by supplier Y to a charity dinner as their guests where they will be treated to entertainment costing around £1,000 each at the men-only event. The guest list is packed with clients and competitors in the industry. Should they attend? End of scenario.

The ticket price of £1,000 would be ‘trigger one’. It would prompt a deeper dive into whether attendance is a good idea, initially relative to the UK Bribery Act and the Gifts and Entertainments clause of ISO 37001, the anti-bribery standard.  At a rough guess, the invitations should have been rejected at this stage by many guests, as attending the event, with this ticket price, could be seen to represent a significant potential compliance issue. Whereas they probably wouldn’t take a £1,000 bung for a business favour, a dinner ticket worth a grand needs careful handling. Alternatively, executives could be offered the chance to pay for their own tickets to avoid any whiff of a business ethics issue.

But if the company still considered allowing executives to accept the invitation, it should have a policy on, and a process to evaluate, offers of gifts, entertainment etc and give or refuse approval to attend on the company’s behalf.

‘Trigger two’ would follow, once due diligence had established the real nature of the event (men only except professional hostesses), aside from its charitable fund-raising.  And perhaps it would be good if men AND women were involved in this due diligence.  At this stage, it would probably be a ‘no’.

But in a broader context, if any scenario identifies a risk as having potential to hit the company, it must decide what to do against clear criteria.  Should it mitigate the hazard, avoid it or share it (insure against it)?

Avoiding it is the only option. It’s almost impossible to ‘share’ the risk of attendance at the Presidents Club dinner by insuring against it – and post-hoc mitigation attempts by those invited have been hilarious and represent some are excellent examples of throwing fuel on the fire.  Companies refuse to comment (their name is already in the Financial Times), so they’re guilty by association.  Individuals, including politicians say they were invited, but claim they left early (presumably before any of the harassment or groping got underway); some said they weren’t aware of any bad behaviour and others say that although they were invited, they weren’t there.  It’s the sound of British business in five-speed reverse… 

Anyone who thought a dinner like this couldn’t possibly be the subject of headlines of the Financial Times – for consecutive days – and that the Presidents Club itself would be dead in a day and a half following these revelations – needs a reality check.

So what should have happened?

A company wanting to avoid reputational damage and possibly a big-ticket legal item, like being the wrong side of the UK Bribery Act, should have implemented a systematic and arm’s length approach to event due diligence, which may include the following:

  • A diversity of people should review events the company is involved in on a strategic basis – and a case-by-case
  • The review needs to thoroughly determine the type of event – by using multiple sources
  • It needs to evaluate whether the cost of the tickets offered are in line with its own gifts and entertainments policy. If it doesn’t have one, it needs to get weaving PDQ…
  • On a company basis, it should avoid the hazard and not attend the event, as mitigation is also almost impossible. Mitigation, in this case, would be like choosing new material for the deck chairs on first day of the first voyage of the Titanic
  • And finally: Executives should do their own risk management 15 second test, by answering this question: “What would my kids think if they knew everything about the event I’m about to go to?”

As my old news editor used to say: “If in doubt (lad), leave it out.”

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