Topics: Risk Management
Topics: Risk Management
January 22, 2021
January 22, 2021
The tragic siege of the US Capitol on Jan. 6 was shocking, adding a new burden of questions and actions for boards in its aftermath. And national security officials, law enforcement leaders, and politicians from both sides of the aisle agree: more politically motivated violence is likely.
The events of 2020—particularly the COVID-19 pandemic and racial justice protests—created a greater imperative for companies to consider their positions on environmental, social, and governance (ESG) matters. Worker safety, job security, and company actions that may affect reputation all became important matters for boards to oversee. The recent political violence adds a new level of urgency to addressing ESG issues. As companies weigh enterprise-risk scenarios that could result from potential ongoing political violence, here’s what boards can do.
1. Consider the risk of political violence on your company’s business model. As a result of the violent activity at the Capitol, some companies took swift action to avoid the impact of the violence or to preserve their reputations. Social media companies promptly terminated accounts linked to the violence, home-sharing companies cancelled reservations or issued warnings that they would remove users promoting violence, a book publisher revoked a book contract with a related party, and a popular fundraising site removed all fundraising intended to cover the cost of travel to potentially violent political events. In each case, the risk of staying silent was too great.
Each company needs to consider the potential that its products or services might be used to effect or contribute to political violence. Companies that fulfill government contracts, especially those related to homeland security, intelligence, or the military, have an even more urgent need to consider the direct impact on their abilities to conduct business as a result of insufficient vigilance.
Every company should examine its unique characteristics and business model to determine whether it faces specific risks. Outside legal counsel can assist with a thorough review.
2. Understand the impact of this moment on your brand. In this politically polarized time, customers and suppliers are increasingly seeking and drawn to companies and brands that profess political ideals that align with their own. Determine what your company is prepared to say publicly and make sure your managers understand any limitations they have to speak on behalf of the company.
3. Discuss the company’s policies and practices around political activity. Companies must make clear to their stakeholders what types of political activity are considered appropriate for employees at all levels so that future concerns and prohibited employee activity are addressed in a fair, consistent, and timely manner. Leadership should craft internal policies to address these new workplace concerns with the goal of ensuring worker safety and protecting the company’s brand and business operations.
To be clear, this review should not support one party affiliation or political view. Management should ensure policies and procedures are based firmly on the best interests of the company and its various constituencies. Remember that “tone at the top” will be important. If these discussions become contentious, boards and C-suites should invite outside legal counsel or other advisors to lead and manage the discussions.
Offering a clear public statement now about a company’s policies regarding political violence creates grounds for remedial action in the event of transgressions by rogue employees and may soften any reputational blowback.
4. Reexamine guidelines for employee communications. Companies should have well-defined policies on the kinds of conversations and activities that are allowed in the workplace. These should incorporate what defines “appropriate” utilization of workplace email and other company infrastructure. After the events of Jan. 6, one company fired an employee who was photographed wearing his company-issued badge while inside the Capitol building.
Some organizations may also want to review their employee social media policies, even if such activity occurs using personal accounts outside of work hours. For example, what would happen if an employee openly discusses plans for violence or seeks to encourage others to affiliate with a violent group? While this scenario may seem far-fetched for your business, it is better to be clear and upfront about company policy and the consequences of policy violation than to be caught unprepared and unsure about the next steps to take in such an instance.
5. Update crisis plans. Some individuals who stormed the US Capitol have been publicly identified and fired from their organizations. Going forward, companies should have a plan in place in the event that an employee commits or advocates for any behavior that violates company policy.
Boards can help create or update crisis plans that cover the following: prohibited employee activity, the possibility of future political violence against the company itself and its employees, and domestic terrorism in any community connected to the business. These plans should include proposed communications with employees as well as external stakeholders and should outline steps the company would take to address the specific crisis.
6. Refresh workplace safety and violence programs. Threats have been made against numerous corporations in recent weeks—especially technology companies that have been drawn into the debate around their roles in political violence. Consider whether your workplace safety measures and training account adequately for potential domestic terror activities. Programs and policies should be reviewed to ensure that they clearly delineate company policies regarding employee behavior in the workplace that will and will not be tolerated—and to protect employees and other stakeholders who may be put at physical or other risk by domestic terror activities. Provide reminders and training to employees and repeat them at regular intervals.
7. Provide your leaders and front-line personnel with additional training. The threat of political violence or political contention in the workplace is not typically covered in human resource training. Boards can push management to consider offering additional education or training to ensure that human resources, legal, and security personnel are prepared to evaluate any allegations or navigate related situations. Consider whether law enforcement or other expert personnel might be helpful in educating staff on how to identify and respond to extremist groups’ activity.
8. Create a pathway for confidential reporting. Many companies have communication channels to anonymously report harassment or allegations of fraud. Organizations should consider expanding hotlines or creating new ones through which employees can report prohibited activity or discussions of political violence, or related matters that violate company policy. Make sure employees are aware that they have anonymous access to report behavior that makes them feel uncomfortable or unsafe.
9. Keep an eye on institutional investors. Large institutional investors have the power to upend the corporate landscape; several have already done so with regard to boardroom composition by issuing powerful statements in support of board diversity. If they determine that political violence poses a systemic concern, their statements and actions will reverberate widely.
10. Do not be complacent. Experts suggest that political violence is likely to ebb and flow. While many will rightfully breathe a sigh of relief during periods of relative quiet, take such opportunities to thoughtfully review policies and practices so that your company is prepared when the next incident or upheaval occurs.
Helene R. Banks, a partner at law firm Cahill Gordon & Reindel LLP, provides guidance to boards and C-suites concerning corporate governance and ESG matters, and is widely published on these topics.
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