Risk Management Should Play a Stronger Role in Developing and Implementing Social Responsibility Policies for Organizations

In late 2015, it was discovered that a leading vehicle manufacturer had intentionally programmed engines to underreport nitrogen oxide emissions during laboratory testing. This practice resulted in billions of dollars in fines and lawsuits. The nonmonetary repercussions were even more serious as these emissions are associated with pollution and health issues. As the resulting public perception of the product is damaged, it is unknown whether sales and reputation will fully recover. In addition to legal violations, these practices conflicted with internal corporate social responsibility (CSR) policies developed by the manufacturer. In recent years, such policies are increasingly being used in organizations, but are these policies more than decorative words? Are they really able to guide the decision making for protecting the social, political, and environmental footprint of the organizations? The above vehicle manufacturer example seems to indicate that this is not the case. In this article, we discuss this topic. We argue that current thinking about and approaches to CSR policies suffer from some severe weaknesses related to risk and uncertainty treatment, and that there is a large potential for improvements by incorporating ideas and methods from the field of risk analysis and risk management. This article presents challenges and opportunities to adapt the risk discipline to the study of CSR.