UNIT SIXRISK MANAGEMENT

Your personal attitude to risk

Match the business headlines to the types of risk they represent: strategic, operational, financial, compliance.

Match the business headlines to the types of risk they represent: to the types of risk they represent: strategic,

1. Bad weather causes ferry cancellations - food shortages predicted

2. Union Bank of Scotland to buy Belgian insurance company

3. Convenience food withdrawn after tests show use of banned additives

4. Companies say rise in the value of the dollar will hit exporters

Handout: types of risk

Key:

• Headline 1: operational - as reflected in the image of trucks driving on a snowy highway

• Headline 2: strategic – here the bank is investing in buying a foreign company in a different market sector

• Headline 3: compliance - the convenience food ingredients do not comply with the law

• Headline 4: financial - in this case the rise in the value of the dollar is a risk that is outside the control of companies

DISCUSSION: QUIZ SB p. 70, ex 1

VOCABULARY• tamper-proof packaging• to recall a product• to scrap a product• to charge double your normal fee

Answers: SB p. 114

LISTENING SB P. 70, EX 2, 3

VOCABULARYMother Goose rulesvillain (perpetrator)victimvindicatorpundit

INFERENCE SB, p. 70 ex. 4

MOTHER GOOSE• Traditional rules handed down from

generation to generation without questioning- Mother Goose is a traditional book of stories that every child learns at his/her mother’s knee

INFERENCE SB, p. 70 ex. 4

HE WAS TOAST • he was ‘burnt’, he had no chance of

recovering from the mistake

INFERENCE SB, p. 70 ex. 4

AL SHARPTON & JESSE JACKSON• Black religious leaders and human rights

activists

INFERENCE SB, p. 70 ex. 4

STONEWALL• to refuse to give information, i.e. to obstruct

progress like a stone wall

INFERENCE SB, p. 70 ex. 4

PUT LISPSTICK ON A PIG• try to make something unpleasant look more

attractive by artifical means

READING: DAMAGE CONTROL, p. 71

Ex 5 ANSWERS1) The cell phone manufacturer’s stock dropped by 20%, Merck lost roughly $750 million in the fourth quarter of 2005 alone and was expected to have to pay between 54 billion and $18 billion in damages. Perrier lost its position as market leader, and Audi had very few sales in the US marker for ten years. Dezenhall refers to them as examples of how crisis management can be crucial to a company’s survival.(By implication, Dezenhall is showing how his PR company’s fees are justified !)

READING: DAMAGE CONTROL, p. 71

Ex 5 ANSWERS2)strong leaders- survivors are able to make difficult decisionsfeel-good gurus- survivors do not blindly follow conventional wisdom on reputation managementclimate shifts- survivors are flexible enough to adapt when necessary

READING: DAMAGE CONTROL, p. 71

Ex 5 ANSWERS2)guarantees – survivors know there are no guarantees, even when major investments are madepain thresholds- survivors accept short-term losses in return for long-term gainsbaby steps- survivors do not try to solve everything at the same timeself-knowledge- survivors are realistic and objectivethe little guy – survivors believe that the ordinaryy citizen does not have more rightrs than the corporationluck –survivors sometimes get lucky breaks

READING: DAMAGE CONTROL, p. 71

Ex 5 ANSWERS3) In the past, crisis management was judged by financial and ethical standards; now a company’s handling of a crisis is judged by its stock price (Wall Street), its advertising campaigns (Madison Avenue), its success or failure in court (the plaintiff’s bar) and its image on TV.

READING: DAMAGE CONTROL, p. 71

Ex 5 ANSWERS4)The political model of crisis management assumes that a crisis is motivated by an opponent and must be resolved by fighting. The PR model of crisis management assumes that a crisis is the result of accident or misfortune and that it is resolvable through good communications.

READING :DAMAGE CONTROL, p. 71

Ex 5 ANSWERS5) Dezenhall seems to be rather cynical about the media: he refers to hostile scrutiny used to fill the media vacuum on 24-hour-a day cable news, and suggests that radio and TV encourage experts to criticize crisis management on the grounds that successfully resolving crises doesn’t make for very good TV.

READING SB, p. 71 handout-definitions

VOCABULARYto purportto toppleperchcanardredemptiongrandioseto grievea lucky breakplaintiff

• to lionize• short-seller• to be exempt from• scrutiny• messianic• to opine• to torpedo• stalker• whistleblower

REPHRASE

1. Perrier was toppled from its perch atop the bestselling bottled water mountaintop.

2. The future of the company is on the line.3. Merck recalled the product.4. They question conventional wisdom.5. He has a high threshold for pain.6. They purport to be standing up for the little guy.7. He caught a lucky break.8. The media space was once occupied by lionizing

of messianic CEOs.

REPHRASE

9. No one is exempt from hostile scrutiny.10. A company’s handling of the crisis is judged by

Wall Street, Madison Avenue, and the plaintiff’s bar.

11. Experts opine that crisis is being mismanaged.12. We endorse a political model of crisis

management:there is always the threat of motivated adversaries.

13. Corporate stalkers want to torpedo you.