Is your reputation at risk?Is your reputation at risk? https://a2dsolutions.co.uk/wp-content/uploads/2018/09/iceberg-trouble-ahead.jpg 800 600 Charlotte Edwards Charlotte Edwards https://secure.gravatar.com/avatar/9b789cc9be24fc6f7909f8bdaeec3755?s=96&r=g
Organisations are used to considering strategic risks; from fire to floods, data recovery to major technology failures, it’s very likely that these threats have been assessed and a plan devised to neutralise them.
When it comes to reputational risk, this can be a little harder to quantify or measure the impact, so it’s little wonder that organisations do not always have a plan in place to deal with this, should it arise.
Risk to your reputation or brand can literally arise in just minutes. Consider the negative publicity United Airlines received in 2017 when they forcibly dragged a man off a plane they had overbooked. A video of the incident quickly went viral, causing many travellers to voice their outrage and even boycott the airline. The airline’s failure to immediately correct the situation caused many people to no longer trust United Airlines and choose to fly with other companies.
Is reputational risk even considered?
However, organisations do consider reputational risk to be a major concern. In a recent joint study by Deloitte and Forbes Insights that surveyed 300, mostly C-suite and board directors, it was found that reputation is considered the highest impact risk area to business strategy.
Should damage to your reputation occur, however, traditional risk management approaches to reputational risk are not always the best option as they tend to be focused inwards on the workings of the organisation – all things that tend to happen either within an organisation or within an organisation’s control.
Reputation, on the other hand, is shaped outside the organisation. When companies have a reputational risk issue, it usually involves the media and what its customers, employees and other stakeholders are saying in the public domain, which traditional risk management doesn’t focus on or have the tools to address.
A better approach is to find ways to link strategy and innovation to identify where the next disruption could come from, for instance, by using data analytics to spot risks and identify opportunities to the business models.
The ultimate challenge is that many companies still take a rear-view mirror approach to reputational risk. So, if a crisis occurs, they may involve legal and PR and then analyse what went wrong in order to help prevent a similar event. However, this is essentially crisis management, not reputational risk management.
What can you do?
Managing reputational risk should start with looking at the strategy, markets, products and services and what are the critical risks that could impact a company’s brand. The idea behind this being to develop an early-warning system to identify and head off an adverse event before it can impact reputation.
The real effects of reputational risks can be extremely damaging and include loss of customers, backlash from groups on social media, not to mention coverage on the media stage and potential compensation from the company concerned. As such, creating a strategy for reputational risk in this day and age seems to be not only a sensible move, but paramount.