Events which massively impact your reputation need to be managed upfront. But which events can can harm you so much? is it the small events that get out of control or the large rare events that you have missed? I am proposing a method which can help you understand where you have weaknesses and help focus your efforts.

1. Turning a Black Swan
White?
Where should you invest your efforts to
reduce reputational impact?
Adrian Clements
Adrian.M.Clements@Outlook.com
+49 174 8522315

2.  We cant imagine something so bad happening
 We underestimate the consequences or don’t consider all potential
repercussions of the event
 We are not holistic in our approach
 It cant happen to me!
 We simply don’t know.
Learning from the past
If you have ever worked in an insurance company, and more specifically in the claims departments, you will have
been exposed to some of the craziest events you can imagine.
The most unlikely events, scenarios, consequences and stories have all happened to someone, somewhere,
somehow.
So what are some of the reasons for these massive reputational hits?
From a practical view,
which Black Swan event
has never happened
before?
To be more specific, which
initiator of the event has
never happened before?
We need to break the events down into a
series of components so that we can manage
them effectively

3. #
Initiator Impact Accelerator Resistance
Every event has multiple facets which
are complex and dynamic.
However each event has a series of components which are generic
The way a company
handles the initiator, the
impact and accelerators
will have a tremendous
effect on the overall
outcome of the event on
the strategic goals of the
company
What happens following
the event will depend on
a time line of events that
have happened in the
past and could happen
in the future
The event needs to take
place or be one element of
the risk register or risk
mapping. Its why the risk
register entries need to
define or describe a
scenario. This to avoid two
people arriving at different
conclusions because the
scenarios they bud are
different
The event will have to
have some sort of
impact regardless of
what or where it is. This
impact will depend on
view point, type of event
and where you draw the
boundary or risk
envelope.
Amplifier
Media and world interest
at this time will play a
significant role in what
needs to be managed
and the ultimate size of
the event

4. #
Initiator Impact Accelerator Resistance
The tools for managing each critical
phase are different but well known
Only a small part is crisis management
But don’t mix enterprise and the all-encompassing risk management disciplines
Reactionary activities
providing resistance to
the basic impact of
events on strategic goals
Internally focused risk management
activities looking at the “Enterprise”
Typical risk register driven activities
Outward facing risk management
activities tracking global trends,
recent events and social opinion etc.
Amplifier
Enterprise Risk Management
Risk
Management
Crisis
Management
Risk
Mgmt
Social & geopolitical
risk view

5. 5
A New Perspective Toward the
Future
Once broken down into these separate elements we
can start to:
• Identify were we have weak controls and
governance
• Where we are exposed to multiple scenarios and
therefore have a higher risk of such an event
becoming critical
• Where in the event chin we need to focus our
effects
• Quantify the impact such an event can have on
our bottom line and business model
Data Transparency
Identify where you are weak and strengthen those areas. The more
weaknesses you find the more you run the risk of a major event getting out of
control.

6. #
What is my inherent risk
and current status?
Many of these issues should already be captured in
the bottom up and top down risk identification
process. The overview of such risks and their
associated action plans highlights the level of risk and
the current vulnerability status within the company.
Operational Risk Index
Source
Operational Risk
01
Do we have control?
Quality
02
Acceptance level
Process Safety
03
Leading indicators
Key Risk Drivers
Initiator
Key Note:
One element of black swans that is typically commented on is the issue of “we did
not identify the risk!” or “the risk could not be identified”. It should be clear that
people are identifying and then ignoring some events as they feel they are too
remote or they have them under control. Many people are also overwhelmed by
the number of potential risks they can have and thus only concentrate on those
which are feasible or sound logical. Calculating the worst case, all protection
methods failing, as done by most insurance companies should help in capturing
possible events. What we then do with the information is a second step in black
swan analysis.
This list can be extended to cover all of the potential
events and their associated risk category's. Each one
will have sub elements in a value driver tree format
enabling us to get a basic understanding, and
transparency, of where key controls and barriers are
needed or weak.

7. #
Location Location
Location.
Depending on where you are and the current maturity
of that country the impact of a normal event will be
registered. Again this should be part of your normal
risk identification and assessment approach. Be
aware of bias where underreporting of event severity
can be seen.
Social & Political Risk Index
Location
Social & Political
Climate
01
Local or global player
Local Legislation
02
Severity impact
Enforcement Policy
03
Strength of negitionalibility
Key Risk Drivers
Impact
This elemnt of the approach tends to be physical in
nature. Ie associated with a country where the event
takes place. It can also, with a slight change of the
weights used, be where in your plant or which
regulation has been impacted.

8. #
Closeness.
Distance creates a dilution effect that can be a
significant risk reducing factor. In many event
scenarios this can be used affectively and can be
managed. It has been used in design for many years
successfully. However this is dynamic as not only are
there population changes but also legislation changes
that need to be continuously monitored.
Hazard risk assessment
Proximity
Centers of
population
01
Conurbations etc
Social Sensitivity
02
Areas of protection or natural
sensitive zones Natura 2000
Social Natural
resources
03
Economic and social sensitive zones
such as Water sources, irrigation etc
Key Risk Drivers
Impact
Again this element is oriented towards an
environmental impact and event. That is normally
physical in nature. However if you are talking abut say
an Enron type event then the proximity to the public or
market would be a better analogy and corresponding
modifications to the methodology must be made.

9. #
Company Risk Attitude.
Time has two key components that need to be
captured and tracked. That of duration and speed,
which can be monitored in your normal risk
management process, but also global trends.
Tracking similar event types in similar, or even
dissimilar industries, requires a broader view and data
capture. Its not impossible as some of your current
consultants, service providers can give you insight
into some of these trends.
Insurance and management consultant data transfer
Time
Multiplicity of
events
01
Frequency issues
Long/short term
Long/short duration
02
Time line of events
Legacy risk
03
Historical risk
Key Risk Drivers
Accelerator
Here the normal time line of the risk under review
should be used. Days in some cases or even months
if you take the last series of tailing dam storage facility
failures in the mining industry.

10. #
Opportunity and transparency
are sustainable.
Levels of obsolescence, focus on compliance, use of
double standard can all reflect on the company
culture. This has the affect of blinding us to events
which can impact the stakeholder value of the
company. But also limit severely the chance of
opportunity capture
Tone at the top
Company Culture
Ability to transfer
Knowledge
01
Lessons learnt
Compliance based
strategy
02
Company strategic goals
Management of
Change
03
Willingness to be transparent
Key Risk Drivers
Resistance
Company culture has been discussed for many years, but I
always have the impression its misunderstood. There are
multiple examples of where the top management have
indicated that they have the right culture but failed when
tested. This culture is key if you are planning to apply
resistance to any catastrophic event that could take place.

11. #
Communication is key.
We have all seen the affect of communication on
stakeholder value. Too slow, not enough and
sometimes even no information can all negatively
impact the event results.
Media is a two-way street however. What we think and
what others think of us. These can be dramatically
different.
Materiality index
Transparency index
Media
Internal/ External
Communications
01
What are you saying?
Internal / External
information flow
02
What is the world saying?
Emergency crisis
management
03
Are we managing it?
Key Risk Drivers
Amplifier
Information transparency is key. Whether ESG, CSR,
or even SEC 20f reporting the information needs to be
consistent, transparent and truthful. Failure to do this
correctly will amplify errors and you will be in a
defensive mode rather than a controlling and leading
mode.

12. #
What is the focus now and
in the future.
Does the world care right now? Sometimes yes,
sometimes no. Depends on the day and the recent
events.
Depends on the social and political focus today and
tomorrow.
Depends on if someone wants to run a negative
campaign against you.
Be prepared and expect the worst.
World Interest
Social & Political
Climate
01
Where are we going?
Coincidence
02
Whats happened in the world over the
last few months, years?
Global
emotion/passion
03
Do people care?
Key Risk Drivers
Amplifier
Social, political and extreme reactions can easily put
you on page 1. And that very fast.

13. Are there events which no one has never had before?
Or is it a question of underestimating the affect?
Tracking company
strategic goals and
focusing on opportunities
identified weaknesses
that need to be managed.
Internal looking out but
outside looking in can
close many gaps.
RISK
MANAGEMENT
1
Track the risk register
using future driven drivers
like agility, vulnerability,
fragility rather than
severity and frequency
alone.
Capture unknown knowns
using third parties.
ENTERPRISE
RISK
MANAGEMENT
2
Prepare for the crisis by
ensuring the accelerators
and amplifiers have been
used to capture the true
extent of the impact.
“It has never happened”
is not a reason!
CRISIS
MANAGEMENT
3
Most “Black swan” events
have happened before.
Have you understood the
consequences and the
true affect?
WHITE SWANS
4
Why are there Black Swans?

14. Managing Transparency
As the potential Black Swan event has now been sub divided into smaller elements we can start to see through the
fog where we in fact need to focus our efforts.
 Clearly you will have some functions
already operating in these areas such as
communications, HR etc. But you might
also have some gaps in the management
responsibility or you might not be asking for
information as you believe its irrelevant.
 Running simple dry runs can make you
aware of your resilience to such events or
your flexibility in reacting to an unusual
scenario
 You will have some areas where you are
more sensitive and through this
transparency you can review the strength
of the barriers you need or even the
functionality of these barriers
Source
• Can we change the chemicals used?
• Can we change the process flow?
• Do we really have to conduct this business?
Location
• Are we able to manage the location of the event initiators?
• Can we contain, withstand or capture any release, extreme event.
Proximity
• Can we coordinate with local governmental agencies to create safe zones
• Dow e have sufficient internet firewalls to the sensitive areas
• Are dangerous areas isolated?
Time
• Are all decision makers aware of the speed of events?
• What is our company/industry history like?
Company
Culture
• What level of transparency do you have and with who?
• Are you being honest with yourselves?
• How do outsiders see you?
Media
• Who is really looking at whats happening in the world?
• Is there a “it cant happen to me “ attitude?
• Are you leading or following the media?
World
Interest
• Don’t track only the financials of your competitors but also event history
• Who is really monitoring the public passion and sensitivity ?

15. Negative examples
 Union Carbide, Bhopal – the Initiator, Location and Proximity all affected directly the overall result of this event
 Enron – the Initiator, Proximity, Company culture and possibly the Media made this event front page news
 BP, Deep Water Horizon - Time, Media were sensitive areas here
 Arthur Anderson – Initiator, Proximity and Media with no Resistance pushed them too far
Positive examples
 Mining sector – there have been multiple storage dam failures over the last few years having devastating effects on
the public and environment. Some events arising from the same company's. But there has been no large outcry from
the public, no real global change to legislation and companies operate basically as before. Time and media have
been used well.
 Steel industry – massive staff reductions in 10 of thousands not being captured but a few hundred people for some
smaller industries have made front pages of local newspapers. Timing and media with some company culture
elements have been managed positively to reduce image impact.
Examples

16. • Understand your gaps
• Where resources are needed
• If we can mitigate or eliminate risk
• Manage the media
The Black Swan
Initiator
Location
Proximity
Time
Culture
Interest
Media
Aligned with the future
strategic objectives.

17. Create the story that will get interest and
people listening
Show how the risk can impact their
portfolio and their company interests
Show why this risk of worthy of
consideration compared to all the other
issues they have to deal with
Innovation:
Information
consumption
Future:
Decision Relevance
Value:
Risk Information
Board Member Interest
Selling the risk

18. Stakeholder value
Initiator
Source
Impact
Location Proximity
Accelerator
Time
Resistance
Company
Culture
Amplifier
Media
World
Interest
These are the events impacting
Stakeholder value…
Its not the Oil Platform, or the Tailing
Pond dam breakage that triggers such
devastating affects. Ist what is taking
place in society, in other peer groups
and in recent history. This combination
of timing, location and media awareness
needs to be understood to avoid such
impacts.
Understanding which elements of this stakeholder value tree are key to you and your
reputation can help you focus and improve the barriers needed and manage the affect.

19. SUMMARY
The intention of this discussion is not to establish a register
for risks or opportunities that can be Black Swans. The
intention is to identify those existing risks captured during the
normal risk management approach and establish which ones
can become devastating. The elements which can turn a
“normal” event into a Black Swan event.
As noted previously all events have potentially occurred
already or have been identified. They have however
potentially been underestimated and the full extent of the
consequences not fully realized.
By use of this approach during a facilitated workshop can help
to capture similar events that are rare and the accelerators
that can create the domino effect necessary to trigger large
events.
Adrian Clements
Adrian.M.Clements@Outlook.com
+49 174 8522315

20. Adrian Clements
Adrian.M.Clements@Outlook.com
+49 174 852 23 15
Deep experience in both heavy industry and finance through insurance and
steel, mining, and food industry exposure. Self-motivated, forward thinking
executive with high profile companies in challenging environments. Through
deep learning and knowledge is able to rethink business models and
restructure them to create opportunities and sustainability. High focus on
stakeholder value enhancement and shop floor buy in.
Internationally recognised risk management professional.
Bio
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