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How Risk Management Helps Protect Your Brand Reputation

Thomas Frenehard

In anticipation of SAPinsider GRC2016 in Las Vegas in a few weeks, I wanted to share with you some highlights from one of the presentations that I’ll be delivering: Managing Reputational Risk to Protect Brand Value.

We’ve all heard the Warren Buffet quote: “It takes twenty years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”

But there is another one that I think is even more appropriate: “Lose money for the firm and I will be understanding, lose a shred of reputation for the firm and I will be ruthless.”

A reputational impact can have many direct consequences, including:

  • Drop in sales: Customers no longer want to be associated with your brand
  • Drop in share prices: Because of uncertainties on sales and revenue, investors shy away from the company
  • Conflictual shareholders’ and board’s relationships: With a drop in share price, shareholders’ interests are affected and they hold the board accountable

Reputational risk is therefore not just a marketing issue; it can be a credibility problem and a business killer.

One of the major issues with reputational risk is that it spans across numerous stakeholders – customers and investors, of course, but also analysts, media, regulators and control authorities, NGOs, partners, third parties, and (let’s not forget) employees themselves.

Until recently, its velocity – the speed at which it manifests – was quite manageable, because unless it was a major crisis published in a newspaper, it was spread by word of mouth. Replace this with today’s exponential social media reach and it becomes clear why this is now a critical risk to consider.

I don’t claim to have the absolute solution, but I would suggest an approach to manage reputational risk. Use the Plan-Do-Check-Act Cycle that business continuity managers know very well.

Plan: Prepare your governance for ethics and compliance

In this first step, I suggest assessing the current situation: what already exists? From there, formalize the governance structure that will issue the risk policies. In this phase, you would also prepare a crisis plan and communicate it to all stakeholders.

As for any policy, I recommend not only ensuring acknowledgement, but also understanding by all the recipients.

Do: Formalize your risk and control framework

This second step is about documenting what could go wrong – the risks and potential occurrence scenarios – and then defining a sound mitigation strategy to address each case depending on how critical it is. My suggestion here is to assess the effectiveness of each response. A communication plan will help you reduce impact over time, but it won’t prevent a deficient product from reaching shelves in stores in the first place.

Check: Continuously monitor threat levels

Risk context changes all the time. Review the threat levels by taking into account any new incident or near miss recorded. Also, define appropriate indicators that can notify you of any adverse trend so that you’re never caught off guard.

Do people start propagating rumors about your company? Get to know soon so that you can decide proactively what to do instead of being rushed into action.

Act: Take action (or not!) but always communicate

Give your executives, including marketing and communications managers, the tools they need to be able to perform a guided decision on up-to-date risk information. Keep all the stakeholders up to date on the decision, and name a spokesperson. There is nothing worse than discordant messages.

Reap the benefits!

It’s not just all negative. Companies with strong brands have repeatedly shown:

  • Facilitated recruitment of talents
  • Increased and sustainable investor and business partner confidence
  • Customer loyalty
  • Top management stability

What about you? How do you manage this critical asset?

I look forward to reading your thoughts and comments either on this blog or on Twitter (@TFrenehard)!

For more insight on protecting your brand reputation, see This One Mistake Could Cost You Billions.

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Thomas Frenehard

About Thomas Frenehard

Thomas Frénéhard is a director in the Governance, Risk, and Compliance Solution Management team at SAP. His particular responsibility is with SAP Risk Management. Thomas's other functional areas of focus are in internal control and compliance management and audit management. In this role and in constant interactions with SAP’s network of partners, clients, and internal stakeholders, Thomas is responsible for bringing together technology, skills, and products to deliver an always-compelling solution for enterprise risk management.

Industry 4.0: Digital Transformation In Manufacturing

Sandeep Raut

Manufacturing companies have traditionally been slow to react to the advent of digital technologies like intelligent robots, drones, sensor technology, artificial intelligence, nanotechnology, and 3D printing.

Industry 4.0 has changed manufacturing. At a high level, Industry 4.0 represents the vision of the interconnected factory where all equipment is online, and in some way is also intelligent and capable of making its own decisions.

The explosion in connected devices and platforms, combined with the abundance of data from field devices and the rapidly changing technology landscape, has made it imperative for companies to quickly adapt their products and services and move from the physical world to a digital one.

Today, manufacturing is transforming from mass production to an industry characterized by mass customization. Not only must the right products be delivered to the right person for the right price, the process of how products are designed and delivered must be at a new level of sophistication.

The first step in digitization is to analyze the current state of all systems, from R&D, procurement, production, warehousing, logistics, and marketing to sales and service.

The digitization of manufacturing impacts every aspect of operations and the supply chain. It starts with equipment design and continues through product design, production process improvement, and ultimately, monitoring and improving the end user experience.

Digital transformation revolutionizes the way manufacturers share and manage product and engineering design specs on the cloud by collaborating across geographies.

Downtime and reliability are critical when it comes to the operation of equipment on a shop floor. Big Data analytics offers quick and easy access to operation, production, inventory, and other quality data, which enables managers and operators to adjust machines as needed across the enterprise.

Quality and yield are directly related to manufacturing processes, as the way that raw materials are used, inspected, manufactured, and integrated really determines product quality. Cognitive computing helps manufacturers identify quality issues more efficiently, increases production yield, and reduces problems that lead to service and warranty costs.

Implementing smarter resource and supply chain optimization strategies improves the cost efficiency of resources like energy consumption, worker safety, and employee resource efficiency.

Service excellence is also an important element of a manufacturing company’s digital transformation strategy. Connected devices and the Internet of Things (IoT) are changing how after-sales service is delivered. Here are a few examples from industries such as industrial equipment, power generation and HVAC providers:

  • Push service notifications
    • How is your asset health?
    • How is your asset usage?
  • Predictive/preventive maintenance
  • Breakdown assistance
  • Usage-based billing
  • Spare parts fulfillment

General Electric’s jet engines combine cloud-based services, analytics, and online sensors to report usage and status and help predict potential failures. The result is improved uptime and lower cost of ownership.

Additive manufacturing (3D printers) for prototyping help shorten the iteration cycles in the design process and help turn innovation into value. 3D printing is also quickly gaining ground in low-volume commercial manufacturing of customized products.

Smart machines integrated with forklifts, storage shelves, and production equipment are able to take autonomous decisions and communicate with each other to drive material replenishment, trigger manufacturing, and much more.

Industry 4.0 allows manufacturers to have more flexible manufacturing processes that can better react to customer demands.

For more on the impact of digital transformation in manufacturing and other industries, see Live Product Innovation, Part 3: Process Industries, IoT, And A Recipe For Instant Change.

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Connected Four: How EMEA Enterprises Excel With Connectivity

Franck Chelly

The objective of the game Connect Four is simple: The first player who forms a line of four of the same-colored discs wins.

For businesses, achieving connectivity in today’s world of Big Data, the Internet of Things (IoT), and intelligent devices isn’t quite as easy, but the stakes remain the same: connectivity equals victory.

These four organizations based in Europe, the Middle East, and Africa (EMEA) – the Connected Four, as I like to call them – are demonstrating how connected products, assets, fleets, infrastructure, markets, and people can result in a decisive competitive advantage.

1. Hamburg Port Authority: Increasing efficiency and capacity with smartPORT logistics

The Hamburg Port Authority (HPA) manages the safe maritime transport of goods for businesses across Germany and throughout the world. With shipping demand constantly growing, HPA sought a solution to increase port efficiency and capacity.

Through the development of the smartPORT logistics platform, HPA was able to ensure its freight forwarders, container terminal operators, and customers are always connected. By enabling real-time data exchange, HPA, its partners, and customers have a clearer picture of existing port traffic and operations. This will lead to more efficient cargo-handling processes across the supply chain.

2. Alliander: Providing improved energy service, saving time, and cutting project costs

Alliander, a Dutch energy distribution company, serves more than 3 million customers per year.

The organization is currently collecting data from sensors and other intelligent devices to ensure its employees, assets, and infrastructure are all better connected.

By making this information available to its staff in a single point of data access, Alliander can achieve a wide range of goals, including:

  • Pinpointing old gas pipes that need to be replaced, a previously hours-long process that now takes just seconds
  • Predicting peak loads in certain areas of its energy network, enabling the company to better understand where it needs to increase capacity

3. Piaggio: Giving people their kicks with peace of mind

Since the 1946 launch of its Vespa scooter, Italy-based Piaggio has been treating thrill-seeking riders to the time of their lives. And while enabling customers to hit the road for an exciting journey is top of mind for Piaggio, the company is fully committed to ensuring vehicle safety.

Piaggio is largely achieving this with bleeding-edge IoT technology. IoT-connected Piaggio vehicles can alert users that their scooters or motorcycles require service, as well as communicate potential issues directly to the manufacturer or a mechanic. Addressing these issues as soon as they’re detected would allow riders to quickly continue on their adventures, safe from harm’s way.

4. Roche: Stopping diabetes in its tracks with connected care

Connected care is creating stronger relationships between doctors and patients. It’s encouraging people to take better care of themselves. And it’s equipping doctors with greater insight into patient data.

Roche Diagnostics, a Swiss life sciences company, developed a mobile app that enables doctors to track the health of patients in real-time. Combined with a blood glucose monitor and wearable fitness device, the app helps doctors to prevent the spread of diseases such as diabetes. If unhealthy behaviors are detected, the doctor can immediately schedule an appointment with the patient to address the issues and develop a proper healthcare plan.

Turn connectivity into a competitive advantage

The connected four – HPA, Alliander, Piaggio, and Roche – are at the cutting edge of today’s digital economy.

Each enterprise has figured out a way to harness the power of connectivity and transform it into measurable business results, from more efficient processes and faster project turnaround times to lower project costs and new revenue streams.

Business leaders are always on the lookout for new ways to satisfy customers. To achieve this in today’s world of Big Data and constant connectivity, organizations need to embrace the latest technologies.

Download this free brochure to explore how your enterprise can begin implementing innovative solutions and turning connectivity into a competitive advantage and follow @SAPLeonardo on Twitter.

Connect with industry experts, partners, influencers, and business leaders at SAP Leonardo Live, our premier Internet of Things (IoT) conference for breakthrough innovation and technology. Register here and join us from July 11–12, 2017, in Frankfurt, Germany, to experience how your company can run a digitized business.

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Franck Chelly

About Franck Chelly

Franck Chelly is Vice President of Internet of Things and Digital Supply Chain at SAP EMEA. Over the last 29 years, he has presented to business and IT audiences in many different countries around the world on themes such as digital transformation, the Internet of Things, the new customer engagement, the future of digital marketing, the cloud revolution, and the challenges of adoption culture in organizations.

The Future of Cybersecurity: Trust as Competitive Advantage

Justin Somaini and Dan Wellers

 

The cost of data breaches will reach US$2.1 trillion globally by 2019—nearly four times the cost in 2015.

Cyberattacks could cost up to $90 trillion in net global economic benefits by 2030 if cybersecurity doesn’t keep pace with growing threat levels.

Cyber insurance premiums could increase tenfold to $20 billion annually by 2025.

Cyberattacks are one of the top 10 global risks of highest concern for the next decade.


Companies are collaborating with a wider network of partners, embracing distributed systems, and meeting new demands for 24/7 operations.

But the bad guys are sharing intelligence, harnessing emerging technologies, and working round the clock as well—and companies are giving them plenty of weaknesses to exploit.

  • 33% of companies today are prepared to prevent a worst-case attack.
  • 25% treat cyber risk as a significant corporate risk.
  • 80% fail to assess their customers and suppliers for cyber risk.

The ROI of Zero Trust

Perimeter security will not be enough. As interconnectivity increases so will the adoption of zero-trust networks, which place controls around data assets and increases visibility into how they are used across the digital ecosystem.


A Layered Approach

Companies that embrace trust as a competitive advantage will build robust security on three core tenets:

  • Prevention: Evolving defensive strategies from security policies and educational approaches to access controls
  • Detection: Deploying effective systems for the timely detection and notification of intrusions
  • Reaction: Implementing incident response plans similar to those for other disaster recovery scenarios

They’ll build security into their digital ecosystems at three levels:

  1. Secure products. Security in all applications to protect data and transactions
  2. Secure operations. Hardened systems, patch management, security monitoring, end-to-end incident handling, and a comprehensive cloud-operations security framework
  3. Secure companies. A security-aware workforce, end-to-end physical security, and a thorough business continuity framework

Against Digital Armageddon

Experts warn that the worst-case scenario is a state of perpetual cybercrime and cyber warfare, vulnerable critical infrastructure, and trillions of dollars in losses. A collaborative approach will be critical to combatting this persistent global threat with implications not just for corporate and personal data but also strategy, supply chains, products, and physical operations.


Download the executive brief The Future of Cybersecurity: Trust as Competitive Advantage.


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How Digital Transformation Is Rewriting Business Models

Ginger Shimp

Everybody knows someone who has a stack of 3½-inch floppies in a desk drawer “just in case we may need them someday.” While that might be amusing, the truth is that relatively few people are confident that they’re making satisfactory progress on their digital journey. The boundaries between the digital and physical worlds continue to blur — with profound implications for the way we do business. Virtually every industry and every enterprise feels the effects of this ongoing digital transformation, whether from its own initiative or due to pressure from competitors.

What is digital transformation? It’s the wholesale reimagining and reinvention of how businesses operate, enabled by today’s advanced technology. Businesses have always changed with the times, but the confluence of technologies such as mobile, cloud, social, and Big Data analytics has accelerated the pace at which today’s businesses are evolving — and the degree to which they transform the way they innovate, operate, and serve customers.

The process of digital transformation began decades ago. Think back to how word processing fundamentally changed the way we write, or how email transformed the way we communicate. However, the scale of transformation currently underway is drastically more significant, with dramatically higher stakes. For some businesses, digital transformation is a disruptive force that leaves them playing catch-up. For others, it opens to door to unparalleled opportunities.

Upending traditional business models

To understand how the businesses that embrace digital transformation can ultimately benefit, it helps to look at the changes in business models currently in process.

Some of the more prominent examples include:

  • A focus on outcome-based models — Open the door to business value to customers as determined by the outcome or impact on the customer’s business.
  • Expansion into new industries and markets — Extend the business’ reach virtually anywhere — beyond strictly defined customer demographics, physical locations, and traditional market segments.
  • Pervasive digitization of products and services — Accelerate the way products and services are conceived, designed, and delivered with no barriers between customers and the businesses that serve them.
  • Ecosystem competition — Create a more compelling value proposition in new markets through connections with other companies to enhance the value available to the customer.
  • Access a shared economy — Realize more value from underutilized sources by extending access to other business entities and customers — with the ability to access the resources of others.
  • Realize value from digital platforms — Monetize the inherent, previously untapped value of customer relationships to improve customer experiences, collaborate more effectively with partners, and drive ongoing innovation in products and services,

In other words, the time-tested assumptions about how to identify customers, develop and market products and services, and manage organizations may no longer apply. Every aspect of business operations — from forecasting demand to sourcing materials to recruiting and training staff to balancing the books — is subject to this wave of reinvention.

The question is not if, but when

These new models aren’t predictions of what could happen. They’re already realities for innovative, fast-moving companies across the globe. In this environment, playing the role of late adopter can put a business at a serious disadvantage. Ready or not, digital transformation is coming — and it’s coming fast.

Is your company ready for this sea of change in business models? At SAP, we’ve helped thousands of organizations embrace digital transformation — and turn the threat of disruption into new opportunities for innovation and growth. We’d relish the opportunity to do the same for you. Our Digital Readiness Assessment can help you see where you are in the journey and map out the next steps you’ll need to take.

Up next I’ll discuss the impact of digital transformation on processes and work. Until then, you can read more on how digital transformation is impacting your industry.

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Ginger Shimp

About Ginger Shimp

With more than 20 years’ experience in marketing, Ginger Shimp has been with SAP since 2004. She has won numerous awards and honors at SAP, including being designated “Top Talent” for two consecutive years. Not only is she a Professional Certified Marketer with the American Marketing Association, but she's also earned her Connoisseur's Certificate in California Reds from the Chicago Wine School. She holds a bachelor's degree in journalism from the University of San Francisco, and an MBA in marketing and managerial economics from the Kellogg Graduate School of Management at Northwestern University. Personally, Ginger is the proud mother of a precocious son and happy wife of one of YouTube's 10 EDU Gurus, Ed Shimp.