Part 1 in this series touched on problems private companies face when dealing with societal grievances and the effects internal and external aggravators have on their operations.



Harmful actors and organizations prey upon simmering, and frequently legitimate community grievances to further their own objectives, which typically do not align with the long-term goals and growth of the community, region, or country. These activities pose significant threats to business operations through protests, litigation, criminal activity, and violence. A prevailing bureaucratic mindset is that simple public relations, so-called ‘community outreach’ programs, and physical or technical security upgrades will be sufficient to address community-based production risks. Such a mindset is understandable, but it fails to efficiently and effectively address fundamental issues that underly local community grievances. Billions are spent annually on corporate social responsibility (CSR) initiatives and traditional security measures, which fail to adequately reduce the revenue losses directly correlated to production disruptions or stoppages.

A recent study indicates multinational corporations spend $102.6 million annually on an average to fund CSR initiatives to maintain their social license to operate. Ten billion dollars is spent annually on public relations campaigns to build or restore reputations. Physical security and risk management costs corporations, on average, between $11.9 and $14 billion annually, with costs expected to increase annually by 3.5 percent over the next three years. The 2009 Harvard University study, The Costs of Conflict with Local Communities in the Extractive Industry (presented at the First International Seminar on Social Responsibility in Mining, Santiago, Chile in October 2011) attributed the increased costs incurred by companies in the extractive industry to conflicts with the local communities where they operate. Increased costs were the result of lost productivity from work delays, diversion of management time in order to deal with conflicts, and, most significantly, the complete suspension or abandonment of projects.

quoteYet cost is measured not only in dollars, but also in time spent on designing metrics and reliance on alleged predictive analytics. The majority of companies rely upon national-level geopolitical analysis and use statistical-based regressive modeling techniques to produce country-wide risk assessments. Numerical values and weights are assigned to historical events, ingesting them into modeling and simulation applications to determine risk levels. This method fails to effectively incorporate a population’s culture, customs, traditions, narratives, and grievances that underpin social tension and conflict. Moreover, the analysis is reactive and fails to forecast, and provide ways to avoid social conflict. Traditional geopolitical analysis is too broad and nationally or internationally focused to adequately discover local identity layers, core narratives, and discern the underlying grievances that drive future conflict. Reliance on outdated risk analysis techniques, investments in ineffective CSR initiatives, and defensive security postures, lock companies into social conflicts with the communities where they operate.


Part 3 in this series will identify effective mitigation strategies and solutions most apt at preventing operational inefficiencies.