Corporate Social Responsibility as Risk Management

This paper develops a conceptual framework for companies to manage the emerging social risks they encounter as they go global, and of the contribution of corporate social responsibility (CSR) programs to managing those risks.

Globalization offers many opportunities to companies, but also poses novel sources of uncertainty and risks. Multiple business indicators show that the level of uncertainty for corporate leaders has increased, due in large part to:

• Large extended enterprises made up of independent organizations but with tremendous pressures to grow and perform as a unit;
• Rapid rates of change in technology, connections and information flows as a result of globalization; and
• Problems in managing scale using methods rooted in controlling all decisions across the entire extended enterprise.

The result of the greater interdependencies and hidden vulnerabilities that businesses now face is an increased number of uncertainties in corporate decision-making. Current network-based operating models highlight the growing importance of the extended enterprise by establishing greater connectivity among and between stakeholders across the globe. This connectivity has also created entirely new stakeholders and requires innovative forms of risk management.