Can't Touch This — Intangible Assets

Risk Management

by Ed Schirick

One of the goals of risk management is to preserve the assets of the
organization, so leaders and managers can use them to fulfill the organization’s
mission. As risk managers have become more sophisticated, there has been
a realization that assets at risk can be both tangible and intangible.

Webster’s Collegiate Dictionary defines tangible as “capable
of being perceived especially by the sense of touch” and “substantially
real — material.” Tangible assets are physical and include
buildings (real property) and their contents (personal property), vehicles,
people, and cash for example.

It stands to reason then that intangible means not tangible, unable
to touch, or impalpable. Because they are not physical, identifying intangible
assets presents another challenge. As a result of limited awareness in
the field and the nature of intangible assets themselves, camp professionals
have consistently overlooked their organization’s intangible assets
and failed to include comprehensive, risk management strategies for preserving
them in their risk management plans.

Before going too much further, it is important to say this is not an
attempt to moralize or preach. Much of what follows is based upon personal
experience and acknowledged as good business practice. Many camps follow
these and other appropriate business practices, which have served them
well over many years. The objective is to challenge the reader, not to
moralize. The goal is to get camp professionals to think about their relationships,
business practices, and actions in new and perhaps different ways, helping
them to understand that within their risk management plans the intangible
assets of their organization are worthy of being preserved and managed
along with their tangible assets.

Good Working Relationships

A good, professional working relationship with government and regulatory
officials in your community is an example of an intangible asset. Cooperating
with health department inspectors and officials is expected. Treating
them politely and professionally, the way you would want to be treated
yourself, helps to create a good relationship, the kind that can be an
asset that could be helpful to you in the future.

A case in point occurred many years ago. A camp had an outbreak of salmonella.
Good relationships with the local health department, local merchants,
health-care providers, and an instinctive crisis-response effort resulted
in the camp being allowed to stay open and work through the crisis, while
the health department monitored the situation closely. There was certainly
some good luck involved in this experience, but it appeared to those involved
that the health department’s decision was influenced significantly
by the trust and confidence the camp had developed over time with their
local officials. In short, they had credibility!

Not every circumstance like this one will turn out as well as this one
did. But, without identifying the importance of a good working relationship
with all government and regulatory authorities as an asset to be managed,
the potential for a good outcome in a similar situation is left to chance
— not a very good risk management practice.

Positive Work Environments

Human resources are definitely tangible assets. But, a positive working
environment is another example of an intangible asset. Has anyone ever
asked you to describe the perfect person for a tough job? Have you ever
said in response, “You know I’m not sure, but I’ll recognize
the perfect candidate when I see him/her”?

Identifying the elements of a supportive, positive work environment
presents the same challenge. Camp directors talk about the phenomena and
the incredible positive experience that follows when all of the elements
of a positive work environment are present during the summer. Some speak
about it reverently, almost as if it were a spiritual experience. Perhaps
it is. Is this an asset? Is this something you can touch?

Part of the formula for creating a positive work environment is doing
simple things, like keeping your word, doing the “right thing”
in difficult circumstances, being consistent, rewarding behavior you want
repeated, and treating people equally and fairly. Beyond these actions
the formula for a great work environment becomes unique to each camp.
How does this benefit your business? Well, it almost seems unnecessary
to say that when staff experience a high-performance, positive work environment,
there is a better than average chance your campers will have a good time
too. Is the future earning potential of your business an intangible asset?
Is it worthy of some risk management planning?

Knowledge is Power

Someone coined the phrase “knowledge is power.” Knowledge
is also an intangible asset. Some refer to knowledge as the ultimate competitive
advantage for a business, because the knowledge of the organization and
the individuals who are the organization cannot be duplicated. In some
businesses this knowledge has become known as “trade secrets.”
But, knowledge is definitely a double-edged sword.

Does your organization have key staff with specialized knowledge? Does
anyone else in the organization share this knowledge? What happens to
the knowledge and your organization if something happened to your key
staff tomorrow? Can the knowledge be duplicated, or would it be lost to
the organization if the staff person leaves, dies prematurely, or is disabled?

A Good Reputation

Your camp’s good reputation is another example of an intangible
asset. It is often the first one identified when the conversation turns
to intangible assets. But, a good reputation and the goodwill that is
generated by a good reputation are the sum of a thousand small, simple
actions, such as paying your bills on time, being honest in your business
dealings, and so on.

It is like being a kid again, putting pennies in a piggybank day after
day. One day you stop, total up the pennies and are surprised to learn
how much you have saved. In a business context, your business dealings
are pennies representing either a deposit or withdrawal from an imaginary
bank account. At some point in time, the total is evaluated, and the sum
is the reputation of your business. If you have more deposits than withdrawals,
you will enjoy the approbation of your peers, trust, confidence, credibility,
goodwill, and many other benefits that flow from having developed a “good
reputation.” You can’t touch a good reputation, but you’ll
know it when you see it.

The risk management process provides camp directors with a road map
to help you and your organization find your way over, under, around, and
through the risks, which may impact your camp operation. Take some time
before next summer, if you haven’t already done so, to expand your
risk management process to include your organization’s intangible
assets. Best wishes for continued success.

Ed Schirick is president of Schirick and Associates Insurance
Brokers in Rock Hill, New York, where he specializes in providing risk
management advice and in arranging insurance coverage for camps. Schirick
is a chartered property casualty underwriter and a certified insurance
counselor. He can be reached at 845-794-3113.

Originally published
in the 2004 March/April issue of Camping Magazine.