Tiger Woods is a classic example of risk management failure for Accenture

What does Tiger Woods have to do with “All eggs in one basket”? Nothing except that Accenture decided to treat Tiger woods as the “ONE BASKET” that will deliver exceptional gains for Accenture. Accenture decided to base its branding wholly on one person that was considered undefeatable and considered as the person who could deliver “High Performance” each time he went out to play.

But the recent scandal has proven yet again that it is not advisable to place all eggs in one basket. Relying solely on tiger woods for its brand positioning, Accenture failed to recognize reputation risk as a result of failed sponsorship and as a result of tarnished image of its brand ambassador. The reason this risk was not perceived is because it is considered to be an extreme risk event. It was unthinkable that Tiger woods would be involved in such a mess. Even if this risk was perceived, there was no alternative risk mitigation plans developed. Accenture had to terminate the sponsorship and wait for months before something new can be recreated.

Good risk management practices state that all possible risks should be evaluated and appropriate risk management efforts taken. If Accenture had thought of this risk, it could have taken appropriate steps to diversify the impact of such a risk. One example of appropriate action could have been to continue to use Tiger Woods to build the Accenture brand, but in a low profile manner. Another thing that should be evaluated when mitigating the risk from one person sponsorship is that all gains from these sponsorships come at a cost. And when losses occur from these bets, they can be huge. It is anybody’s guess as to what is the non financial or reputational loss to Accenture as a result of this fall out. Maybe Accenture should have (or did consider) considered insurance in the event of pre-mature termination of its sponsorship agreement. This would atleast compensate Accenture to some extent for the business loss or foregone revenues.

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