Analyzing Teneo's Crisis: Risk Management, Governance Failures

This case study examines the crisis faced by Teneo, a consultancy company, following the inappropriate behavior of its former CEO, Declan Kelly, at a charity event in July 2021. The incident led to significant reputation damage, the loss of key clients like General Motors Co., and various financial risks including funding, liquidity, and market risks. Teneo's response included reputation campaigning and cash flow forecasting, but these efforts were insufficient to fully mitigate the negative impact. The case study identifies gaps in Teneo's approach, such as the inadequacy of their reputation campaigning and the decision not to terminate Declan Kelly's employment. It also discusses the importance of risk governance and regulatory risk in preventing and managing such crises. The analysis concludes with recommendations for Teneo to prevent similar incidents in the future, emphasizing the need for a strong ethical culture and effective risk management strategies.

CASE STUDY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Assessment of key risks to Teneo................................................................................................3
Classification of risks..................................................................................................................4
Teneo’s response to its risk exposure..........................................................................................5
Gaps and shortfalls in Teneo’s approach.....................................................................................6
Relevant aspect of risk governance and regulatory risk..............................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Teneo is a consultancy company which was founded in the year 2011 and is
headquartered in the New York city, United States. It was founded by Declan Kelly, Paul Keary
and Doug Band. The key services provided by Teneo includes strategic and communications
services such as client communications, crisis management, stakeholder relations, digital and
social media consulting and litigation management.
In July 2021, the consultancy company Teneo which used to advise big companies on
how to manage a crisis, had to face a crisis due to the mistakes and inappropriate behaviour of
their own CEO Declan Kelly. In July, 2021, as per the news leaked in the financial times, it was
revealed that the former CEO Declan Kelly inappropriately touched a number of women in a
charity event after getting drunk. After this incident, the company took back the positioned
assigned to Declan Kelly and reduced the responsibilities given to him. Paul Keary was
appointed as the new CEO of Teneo. This news created a havoc in the market and one of the blue
chips clients of the company that was General Motors Co. decided to end their business
relationship with Teneo. Due to this incident, Teneo had to bear losses which can only be cured
if the company implements necessary strategies to mitigate the financial risk.
According to the Minnotte, and Legerski, (2019) the use of excessive alcohol, sexist
attitudes among the people holding high positions, job status, lack of moral values and lack of
respect for other people are the key factors that leads to such kind of harassment.
MAIN BODY
Assessment of key risks to Teneo
Due to the mishap occurred at the charity event by Declan Kelly, Teneo became prone to a
number of risks which have been explained below:
Reputation risk
The inappropriate behaviour of Declan Kelly at the charity event has affected the
reputation of the Teneo badly in the market. This incidence has changed the perception of its
client in regards to the company. General Motors Co. was an elite and blue chip client of Teneo,
but with the news of harassment coming out, it decided to end all the business terms with the
company. Similarly, many other small clients fear to build relations with Teneo as they have a
fear that people might put them in the black list too (Blajer-Gołębiewska, Wach, and Kos,

2018). The damage to the reputation of Teneo has already been done by Declan Kelly, due to
which company is facing various kinds of financial risks too.
Funding risk
Teneo is facing funding risk in the market due to its own faults and existing reputation.
Because of the Declan Kelly incident, the stakeholders started to took out the money invested by
them in the company which created a crisis for the company. Though, what Declan Kelly did
was wrong and cannot be justified but he was a great asset to the company. He was the main
consultant which used to provide advisory services to other firms and was a financial source of
the company (Cavusgil, and et.al 2020). The resigning of the Declan Kelly from the position of
CEO has also affected the company financially. But after the incidence, the company is unable to
find new investors and finding difficulty in borrowing the money.
Liquidity risk
The crisis that occurred in July 2021, has affected the liquidity position of the Teneo.
This mishap created a feeling of distrust among the shareholders and investors of the company
and they started taking back their money which created a liquidity crisis inside the Teneo. The
application to refund huge of amount money within a specified time created liquidity issues for
the company and affected the position that the Teneo held.
Market risk
Teneo faced market risk due to the incident of July, 2021. This suddenly changed the
whole dynamics of the demand and supply for the services of the company. One impact of the
incident was the sudden decrease in the number of clients and the demand for the services of the
company (Han, and et.al 2019). This affected the financial position of the company.
Classification of risks
Financial risk
A financial risk refers to a type of risk that can result in the loss of money for a company.
This risk states a probability that the company will not be able to meet its financial obligations
on time due to the unavailability of adequate amount of funds. The liquidity risk, funding risk
and the market risk faced by the Teneo falls under the category of financial risk as all of these
risks results in some kind of financial loss to the company. The market risk involved the
reduction in the demand of the services offered by the company leading to a financial loss. The
liquidity risk was the reduction in the amount of liquid funds with the company and funding risk

referred to the difficulty in finding the source from which the company could borrow. All of
these risks led to the financial loss of the company (Kesavayuth, Ko, and Zikos, 2018).
Qualitative risk assessment model is a used to identify the threats to a business such as the threat
of financial loss arising from the internal as well as external determinants of a market.
Business risk
A phenomenon or risk which affects the profitability of a company can be defined as a
business risk. Anything that act as a barrier in achieving the company’s goals can be categorised
as a business risk. Similarly, the reputation risk faced by the Teneo falls under the category of
business risk as the loss of reputation in the market affected the company’s sales which in turn
led to decrease in the profits of the company (Lamine, and et.al 2020). Teneo used the Dynamic
risk assessment model in order to identify the reputation risk because it analyses the sudden
changes in external environment of the company and take steps accordingly.
Teneo’s response to its risk exposure
In order to mitigate the impact of the various risks faced by the Teneo, the company took
necessary steps and formulated strategies:
Reputation campaigning
As Teneo is a consultancy company and its services includes crisis management, client
communications, stakeholder relations, digital and social media consulting and litigation
management, the management of the company is well versed with the tactics which can be used
to cure the losses suffered by the company. Teneo used reputation campaigning as a response to
the exposure of reputation risk. Reputation campaigning refers to promoting and monitoring of
positive content related to the brand which help the company in improving its goodwill within
the market (Lee, 2018). It involves public relations and client communication in order to clear
the negative reviews and feedback set by them about the company. This strategy helped Teneo in
improving its brand position within the consultancy industry.
Cash flow forecasting
Teneo faced a number of risks which falls under the category of financial risks such as
liquidity risk, funding risk and market risk. As a response to these financial risks, the company
implemented the strategy of cash flow forecasting. Cash flow forecasting refers to keeping a
track of the cash that goes in and out of the company. This strategy includes determining the
current and future needs of cash for the purpose of smooth functioning of the business. This

strategy helped Teneo in the times of need when investors begin to take back their money from
the company and other companies denied to lend funds.
Gaps and shortfalls in Teneo’s approach
Inadequacy in the structure of reputation campaigning
The management of the Teneo made strategies in order to improve the brand position of
the company in the market by using client communication as a tool to clarify the negative
feedbacks set in their minds. It also tried to communicate with the public with the help of social
media for convincing the public to remove all the bad reviews from their mind engage
themselves with the company (Mihoci, and et.al 2020). But, however, Teneo failed to convince
the public to re-engage themselves with the company. The company failed to remove the impact
of that incident from the minds of the people. Teneo used SWOT analysis and risk rating scales
in order to determine the impact of risk management strategies implemented by the company.
SWOT analysis helped Teneo in identifying the current strengths, weaknesses, opportunities and
threats of the company.
Not firing Mr. Declan Kelly
Though the company took back the position of CEO from Declan Kelly but they did not
find the courage to fire him from the company as he was the major source of finance for the
company. He was an asset for the company because of his consultancy and strategy building
skills. Most of the clients of the company including the General Motors Co. were with the
company because of his skills but now people refuse to be a client of Teneo because of the
Declan Kelly (Minnotte, and Legerski, 2019). People think that the company does not realize the
intensity of the offence done by Declan Kelly and therefore finds it hard to change their mind
towards Teneo. In order to reduce the impact of the mishap done by Declan Kelly, it was the
need of the hour to remove him from the company and not only from the position of CEO. Teneo
used the risk rating scale for the purpose of identifying the intensity and impact of the response
of the company to risk exposure.
Relevant aspect of risk governance and regulatory risk
Risk governance and the regulatory risk is a governing authority and a management
structure which integrates different departments in an organization for increasing the efficiency
of the company and reduces the risks that can arise. This helps in bringing cost effectiveness and
doubling of effort. They key aspects are as follows:

 Risk governance involves a set of rules, practices and principles which guides a business
to reduce the risk involved.
 This regulatory body identifies the potential threats that can harm a company and take
necessary steps to mitigate the risk (Polinkevych, and et.al 2021).
 Risk governance and regulatory risk helps an organization in integrating the efforts of the
company and thus, multiplying the benefits that can be achieved through it.
CONCLUSION
According to the facts observed from the case study, it can be stated that the company
faced a crisis from the perspective of risk management. Due to the happening of the incident of
Declan Kelly in July, 2021, Teneo became prone to a number of risks in the market. This
incidence affected the reputation of the company badly. The company started to lose its clientele
including its blue chip clients such as General Motor Co. The negative impact on the goodwill of
the Teneo affected the financial position of the company as well. People lost faith in the
company as a result of which the shareholders started to take back the money invested by them.
This created a liquidity risk, funding risk and market risk for the company. Because of the
damaged reputation, it became hard for the company to borrow money from financial institutions
and other companies. The damaged goodwill of the company also affected the demand and
supply of the company as there was sudden downfall in the demand of the services offered by
Teneo. All of these issues created problems related to liquidity for Teneo and affected its market
positioning and degraded its brand image in the eyes of customers.
Recommendations
A set of recommendations in order to minimize these risks in future:
 Firstly, it should the priority of Teneo to make sure that such an incident never happens
in the whole life of Teneo and even if it ever happens the company should have a strict
policy and punishment guidelines for the culprit.
 In order to avoid liquidity risks in future, Teneo should forecast the requirement of cash
flow that could arise in the near future and a maintain a liquidity fund which can be used
in the times of emergency. It should also keep a track of the cash that comes in and out of
the organization.

 For the times, when it gets hard for a company to borrow money from a financial
institution, the company should have a specific reserve which can be used by the
company in such situations and avoid the occurrence of risks related to the funding.

REFERENCES
Books and journals
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Cavusgil, S.T., snd et.al 2020. Risk in international business and its mitigation. Journal of World
Business. 55(2). p.101078.
Han, Km and et.al 2019. Political identity and financial risk taking: Insights from social
dominance orientation. Journal of Marketing Research. 56(4). pp.581-601.
Kesavayuth, D., Ko, K.M. and Zikos, V., 2018. Locus of control and financial risk
attitudes. Economic Modelling. 72. pp.122-131.
Lamine, E., and et.al 2020. BPRIM: An integrated framework for business process management
and risk management. Computers in Industry.117. p.103199.
Lee, J., 2018. Passive leadership and sexual harassment: Roles of observed hostility and
workplace gender ratio. Personnel Review.
Mihoci, A., and et.al 2020. FRM financial risk meter. In The Econometrics of Networks.
Emerald Publishing Limited.
Minnotte, K.L. and Legerski, E.M., 2019. Sexual harassment in contemporary workplaces:
Contextualizing structural vulnerabilities. Sociology Compass. 13(12). p.e12755.
Polinkevych, O., and et.al 2021. Business risk management in times of crises and
pandemics. Montenegrin Journal of Economics.17(3). pp.99-110.
Roncalli, T., 2020. Handbook of Financial Risk Management. Chapman and Hall/CRC.
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