Developing or severing relationships between organizations carries risk. An affiliate partnership is a relationship just like other vendor or sponsor relationships in that the actions of these third parties can impact a company’s reputation and success. From a risk management perspective, this impact can be assessed.
Companies should consider doing a risk assessment on the impact of choosing to cut ties with the NRA or not. This approach will integrate clear, objective insight into the decision-making process. Every company is different, so it’s important to measure and address the risk-reward tradeoffs this decision carries for a specific company.
For example, The First National Bank of Omaha is one of America’s 15 largest credit card issuers. Their partnership with the NRA provided members NRA-Branded Visa cards with 5% cash back on purchases.
NRA members represent a segment of consumers whom the First National Bank of Omaha could attract by offering them discounts. However, there is another segment of consumers who feel strongly about increased gun control. Both segments threaten to take their business elsewhere. So, what decision should be made?
These types of decisions are complex, emotional, and personal. When making these kinds of decisions, be it at home or at work, it often helps to turn to an objective arbitrator to help you weigh the pros and cons of your choices. In this scenario, risk assessments play the role of an objective arbitrator.
On Thursday afternoon, the Bank tweeted, “Customer feedback has caused us to review our relationship with the NRA,” and that they would not be renewing their contract to produce NRA-branded Visa cards. This type of risk-reward analysis helped First National Bank of Omaha realize that maintaining a relationship with the NRA would have a large enough impact on their reputation to justify cutting ties.
In addition to weighing the impact this decision could have on customers and investors, there is a litany of other factors companies need help accounting for. Take Delta for example. Shortly after making the decision to cut ties with the NRA, headlines such as these surfaced: “Delta’s decision to cut ties with the NRA could cost it a generous tax break from the state of Georgia.”
Did Delta consider the possibility of these ramifications? Did they think to consult their political stakeholders? Had they identified and assessed every possible risk of discontinuing their partnership with the NRA, they would have been more equipped to respond to these kinds of headlines. So far, however, their PR efforts have missed the mark, and the issue has now spiraled into discussions concerning corporate tax breaks, Georgia’s economy, and politics.
The nature of this decision is both emotionally and strategically complex. Risk management can help companies clarify risk-reward tradeoffs as they work through this fragile issue.