The ramp speed of business-disrupting social issues has accelerated in 2019. Mother’s Day triggered a backlash for Nike’s policy of reducing pay for some sponsored female athletes while pregnant, extending the criticisms and litigation on its gender equity issues. And, in Silicon Valley the modus operandi for many has been to build scale and worry later about social impact. This has resulted in a public reckoning for companies like Palantir, which is facing mounting social criticism for its business with the Immigration and Customs Enforcement agency.
While none of these companies anticipated these business disruptions, they were not random events caused by external forces. They were self-inflicted, stemming from their business policies or strategies. It’s a cautionary tale of a new category of enterprise risk management: social risk.
Every company has social risks inherent to its business. But, like an iceberg below the surface, those risks are often invisible until it is too late. A company’s social footprint—the social impact of the way it does business—becomes a material social risk when its negative social impact grows with the company. When a company’s growth multiplies its negative impact, outrage follows. In today’s social landscape for business, a company’s actions are under constant public scrutiny, one click away from a viral crisis with an airtime longer than a momentary disruption.