Options for Identifying Intangible Capital Risks

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Relationship Capital Risks

Relationship Capital is not always immediately understood as a knowledge asset. But the growing interconnections facilitated by technology with customers, outsourcing partners, suppliers and many other kinds of partners have created a body of shared knowledge that is critical to the operation of most businesses.

Shared is a key word here because, while sharing is an important component of relationship capital, it also represents a source of risk to the organization. Many an American company has given away its IP in recent years as its knowledge has moved from the category of proprietary structural capital to the category of shared relationship capital with outsourcing partners.

There is another aspect to relationship capital that is embodied in brand and reputation. Reputation gets more and more attention because of the vulnerability created by social media and always-on communication systems; any mistake can be broadcast immediately and the price for it can become significant. In many ways, reputation has become the most important metric for business today; it’s your license to do business in the future. As important as profits are to a business, no one cares how much BP made before the oil spill. What counts is the confidence of their stakeholders going forward. While reputation can and should be managed through a marketing function, the real work comes from strategic and risk management of the entire organization’s intangible capital.

The key risks associated with relationship capital include the: Read more

Structural Capital Risks

Structural Capital includes the huge range of knowledge that stays in your organization when everyone goes home at night (as such, it’s one of the answers to human capital risk of knowledge walking out the door).

Structural capital can take many forms. At one end of the spectrum is the formally recorded, legally protected knowledge in intellectual property (IP). Next is the knowledge included in software and formal process. Farther along, there is all the other knowledge residing in manuals, instructions, intranets and other written resources. Finally, at the other end of the spectrum from IP is the shared knowledge that is manifested in work patterns and culture which are shared and understood in the organization—but not necessarily written down.

The key risks associated with structural capital include the: Read more

Human Capital Risks

Human Capital includes all the people that work in your organization. The skills and experience of your people are critical. Knowledge and learning begin and end with people. Employees keep everything going every day. And they originate and perfect new knowledge that can create future earnings. The key with human capital is to turn smart people into a team who want to share their knowledge and institutionalize best practices so the team isn’t at risk when any one individual walks out the door at night.

The key risks associated with human capital include the: Read more

To Understand Risk, First Understand Your IC

Today, 80% of the value of the average company is intangible. A lot of time is spent talking in the IC community about managing and measuring this value. But not enough time is devoted to managing the risk in intangibles.  Based on my conversations with risk management professionals, not enough attention is paid to intangible risks. So this month, I’ll be digging in on this issue. Read more

Relationship Capital and the Growing Importance of Partners

When thinking of relationship capital, most people default to customers, who obviously are fundamentally important to your business.

However, relationships with other kinds of partners are growing stronger and more important for the same reasons as those described yesterday for customers: increased outsourcing, increased linking of systems and the need for co-creation and innovation. I’ll talk about partnerships in value creation and those that provide support systems for your organization. Read more

Today at noon EDT: Driving Intangible Risk Management into the C-Suite

The black goo may be coming ashore in the Gulf Coast, but many would argue that the muck originated in a remote boardroom. In the wake of major headline risk events at BP, Massey, and the venerated Johnson & Johnson, the IAFS’s Mission Intangible Monthly Briefing tackles the trifecta of risk, governance and compliance with our program, Driving intangible risk management into the C-suite.

Leading this conversation on Friday 4 June at 12h00 EDT are Matthew Hogg, Vice President at Liberty International Underwriters, who chairs the Society’s Risk Committee and Cathy L. Reese, a Principal with Fish & Richardson, who chairs the Society’s IA Corporate Governance Committee. Mr. Hogg is a pioneer in intangible asset risk transfer; Ms. Reese is a leading advocate for board-level oversight of intangible asset management.

Registration for this and each Mission Intangible Monthly Briefing is complimentary. Slides and an exemplary downloadable program are posted on the website EVENTS page. Mary Adams, I-Capital Advisors, moderates.

If you are general counsel, chief financial officer, a risk officer, a manager of strategic partnerships, a reputation executive (marketing, PR), a board member of any public company, or have a financial interest in any publicly traded security, you (or a colleague Send to a Friend) won’t want to miss this event.

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Human Capital: The Temp vs. Full-time Employee

Throughout the discussion of unemployment over the past months, I have been watching for a information on a segment of the working population that does not have a single employer. No one counts un- or underemployment of this segment and I have been wondering about how big a trend this is.

In the last week, I found two very interesting sources. They couldn’t answer the unemployment question but they did tell me that this is a bigger segment than I realized. One from Bloomberg BusinessWeek called The Disposable Worker and the other from the Boston Globe on The End of the Office…and the Future of Work. Read more

Call on Intangible Asset Risk and Reputation Metrics

Intangible Asset Finance Society Monthly Call: The President of Intellectual Capital Advisors, Mary Adams, will be hosting Nir Kossovsky on the IAFS monthly call this Friday, July 10th at noon EDT.

Nir is the Chief Executive & Director of Steel City Re, a firm focused on innovating new ways of managing intangible risk. He is also an entertaining speaker and will surely keep Mary on her toes! The call is free but you must register to get the conference information. Hope you can join us!

Program on Relationship Capital Risks this Friday

Mary Adams hosts the monthly call of the Intangible Asset Finance Society on the first Friday of every month. This month’s call on Friday, April 3rd at 12 noon EDT is entitled: IMPOSING PERFORMANCE (BEHAVIOR) REQUIREMENTS ON A COMMERCIAL PARTNER:

Cadbury Schweppes, Kellogg, Mattel – all iconic firms whose products, cash flows, and reputations have been sullied by their business partners through ethical breaches including melamine in milk, salmonella in peanut butter, and lead paint. Read more