Today is National Honesty Day. It’s an ironic ending to a month that begins with the mischief and mayhem of April Fool’s. But in an era marked by declining trust in institutions, honesty is a hot commodity. And while trust in government and the media remain subpar, the corporate world has seen a surge in trust, according to the 2019 Edelman Trust Barometer.
In fact, writes Stephen Kehoe, Edelman's global chair for reputation, “Candor, honesty and transparency are all powerful trust- building elements, together with high expectations (74 percent) that CEOs will embody the values and mission of the organization they lead.” However, earning the trust of Consumers and investors requires more than a champion at the top. It also demands a proactive approach to mitigating third-party Risk that puts a company’s reputation in jeopardy.
Managing risk to earn trust
Due diligence and risk monitoring work in concert to help your company reduce the threat of financial or reputational damage due to the actions of third parties—business partners, suppliers and other agents acting on your organization’s behalf. On their own, those efforts don’t deliver trust; after all, consumers and investors don’t ‘see’ how hard you’re working to mitigate risk.
But they do see the headlines that accompany risk management failures—whether an accusation of misconduct by employees, a DOJ announcement of an FCPA investigation or a discovery of forced labor in an extended supply chain.
And those headlines can do considerable damage.
Take ride-sharing innovator Uber. Just last month, the company revealed that the U.S. Department of Justice is now investigating possible FCPA violations for bribery schemes in Indonesia, Malaysia, China, and India. It’s not great news for a company that is still feeling the aftershocks from a scandal-plagued 2017 that featured accusations of sexual harassment and misconduct and a data breach impacting 57 million user accounts. In the latter case, reported CNBC at the time, “To make matters worse, Uber also now says it paid hackers $100,000 to delete the data and keep the breach quiet, and did not report the incident.” That’s not just a cyber security failure, that’s an honesty failure.
The aftermath of these scandals led to the ouster of several top executives, a ‘Delete Uber’ campaign by consumers and a significant advantage for rival Lyft who saw a 41 percent increase in users. And as the latest FCPA investigation shows, the residual effect of a dishonest culture can live on, even after changes have been made.
On the other hand, companies can turn honesty—and the trust it builds—into an advantage. The 2019 Edelman Trust Barometer also saw a rise in the percent of respondents who believe that companies can achieve profits while also improving economic and social conditions in the communities where they operate. As a result, says Sustainable Brands, “There’s never been a more open door for businesses committed to good governance and positive social and environmental impacts.”
Honesty plays an important role here. Consumers and investors won’t be impressed if a company’s approach isn’t authentic. “That mission better feel real and be real, and that leadership position better be rooted in a real engagement with the issue at hand. If sustainable companies are going to burst through the open door to restore trust and own the economy, we need to be sure our actions live up to our words,” writes Sustainable Brands.
Have you aligned your risk management process to these high expectations?
Take Action Now:
- Find out how technology can help companies build (or lose) trust in The Trust Issue, Vol. 3.
- Check out this infographic on the value of trust.
- Download our eBook on Ethical Expectations to learn more about what consumers and investors expect from your business.
- Explore past volumes of The Trust Issue and how a PESTLE framework empowers risk monitoring on our Trust microsite.
