John Jellinek on Handling a Failure of Risk Management

HANDLING A

FAILURE OF RISK MANAGEMENT www.JohnJellinek.com

Introduction Operating a business in changing conditions requires a diligent executive staff. Success in business often requires a certain amount of calculated risk. Experts are hired to evaluate various opportunities. Mergers and partnerships are approached skeptically, with benefits and challenges carefully analyzed.

Despite the best efforts of a qualified Risk Management team, however, unforeseen challenges may still arise. In some cases, these can appear disastrous at first glance. Business owners must excel at responding to these crises with grace and confidence.

WHAT COULD GO WRONG? Risk management failures are often unavoidable and involve circumstances beyond reasonable control. In the case of Bayer, which purchased Monsanto, unexpected legal issues sabotaged an otherwise positive business transaction.

When companies merge, partner with, or take over another business, all the baggage that comes along must be absorbed.

WHAT COULD GO WRONG? Unfortunate circumstances surrounding the decision for Bayer to move into agricultural and natural healthcare arenas abounded almost instantly. These problems have caused severe financial stress for the 155 year old company. Such unplanned challenges are both damaging and unavoidable.

Critical Response Team Systematic recovery efforts must be carefully handled. Despite the temptation to react quickly, risk management specialists must chart a course of action. This often means moving slowly to avoid further damage to the company’s reputation. Back to the example of Bayer and Monsanto, careful negotiations are currently underway.

The overall value of Bayer dropped significantly after multiple lawsuits were filed against the traditional company. The devastating litigation resulted from Monsanto’s weed killer product that is now thought to be a carcinogen. As the data began pouring in, agricultural workers began filing suit after suit.

CRITICAL RESPONSE TEAM

In addition to the social impact of being associated with cancer causing products, Bayer experienced serious backlash from majority shareholders. Financial partnerships quickly dissolved and the controversial business practices of Monsanto came under serious public scrutiny.

Conclusion Public relations managers provided research and solutions that countered harmful statistics.

Multiple and simultaneous efforts have been employed to change the public image.

The solutions oriented approach may not be swift, but is typically effective.

Much more will need to be delivered to stakeholders, key players, and the general public. Solid quality of the foundation product line will ensure the company remains relevant.

Risk management is still an integral part of the company’s revitalization, and their progress will prove steady and positive.

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