Reputation now seen as top strategic risk, says Deloitte survey
P.S Will you join us at this event?– The Corporate Reputation Protection Master Class 28 – 29 November. For more info: http://goo.gl/7MNDlO
Maybe you have wondered why you should attend Reputation Risk Management training. Well, I believe that it is quite simple. Someone in the organisation must champion the cause of why Reputation is an asset and a risk. Internationally these are Board responsibilities, but ultimately Management will be held accountable by the Board for the correct management or mismanagement of this intangible asset.
And, that is only possible if management has the necessary know- how. In the past there was this belief that this was solely the domain of PR, but with time there has been an understanding that Reputation needs a systemic view and approach. My Master Class on Protecting Reputation unpacks Reputation Risk and offers a number of distinct benefits to an individual and an organisation.
Here are my reasons:
10 Good reasons why you cannot, should not, will not miss attending the Protecting Corporate Reputation Masterclass:
1. Did you know that the good name and reputation of a company are priceless assets – sully your company’s name and it may never recover. ‘Goldman Sachs paid a fine of $540 million to the SEC to get the agency’s inquiry off the front pages,’ says John Alan James, executive director of the Center for Global Governance, Reporting and Regulation. ‘Its stock value was plummeting and its top clients were concerned. It was the same for all the big banks, which together paid $18 billion in fines to regulatory agencies in 2012.’ ‘A Company’s Reputation is its greatest asset and risk, and it should be protected at all costs’. Mr David Glass, ex – CEO of Wal – Mart. This course takes a close look at how to protect and defend this asset.
2. Warren Buffet, the world famous investor and richest man has on numerous occasions said these famous words: ‘It takes 20 years to build a reputation and 5 minutes to ruin it and if you understand this you will do things differently’. Why? Well, Mr Buffet understands that money can always be made, but that a reputation, once lost, is not easily restored. In fact, some studies show that it can take between 3.5 to 11 years to restore a damaged reputation. Want to prevent reputation damage before it even gets public?
3. Reputation Risk is regarded globally as a “meta risk – a potential menace to fundamental business strategy, and possibly an even greater hazard to organizational survival than a financial restatement or problematical findings in a compliance report”. Reports suggest that it currently rates as one of the world’s top 3 risk areas because of its volatility and difficulty to manage and mitigate, yet less than 43% of companies surveyed had a plan to deal with reputation risk both from a mitigation and reputation incident perspective. Question: Is your Company ready to deal with a Reputation incident? If you are not sure, take this survey – http://bit.ly/d5ej9s and attend to learn more tips and strategies to protect your organization.
4. As part of your company’s planning for crises and dealing with reputation risk, have you embedded Reputation Risk into your Enterprise Wide Risk Management system and have you defined reputation risk in 4 different ways so as to determine and implement different perspectives and mitigation strategies? Would you like some assistance with that process? I can guide you.
5. Did you know that this Class integrates best practice and thinking from many disciplines including Reputation Management, Public Relations, Risk Management, Corporate Communications, Corporate Responsibility and Strategic Management, and is a must attend for Corporate Affairs, PR, Risk Managers, Compliance Officers and any staff member responsible for maintaining and protecting a company’s fine reputation. Attend to get a systemic view of this asset and risk.
6. The damage of a reputational crisis can be direct and indirect. These costs could include penalties incurred because of a lack of legal compliance, litigation, media conferences and advertising costs, hiring of crises communication consultants. BUT what about the indirect costs, the effects on various stakeholders? The increased scrutiny leading to additional problems? The customers that do not return? Does your plan of action include both Reputation Incident and Reputation Erosion possibilities?
7. Do you know how to identify reputational risks including the gap between stakeholder’s perceptions/beliefs and the company’s actual performance, areas of vulnerability and current & emerging issues? Studies show that perceptions and concerns of stakeholders was an extremely or very significant issue, making Stakeholder Reputation Risk the highest-ranked challenge – This is one of the definitions we will explore.
8. What is your organization doing to prioritize reputation risks and assessing the probability and the impact of the risk on reputation? Reputation Risk is extremely difficult to quantify. What efforts are being made in your organization to quantify the value & risk of reputation. I will take a look at alternatives that exist inc. monitoring approaches
9. Did you know that you and your organization damage reputation through what you share? Reputations can be made or broken exponentially faster through the use of technological tools to which all stakeholders now have access for the first time. There is risk implicit here and Reputation Managers need to understand the velocity of Social Media risk. Does your Reputation Risk framework and Response plans take the impact and intricacies of Social Media into account? How should you respond to a blog attack?
10. Did you know that Protecting a company’s reputation is part of internal governance (in contrast to external governance policies and procedures which comply with laws and regulations), and is one of the most important responsibilities – if not the most important responsibility – of the board of directors. Research shows that Reputation risk is top of mind for directors.
The ultimate question then: Does your company have watchdog systems and a plan if it is subject to a reputational attack? It is the board’s responsibility, as part of risk management, to ask these questions and to make sure that the answers are sufficient.
The 2 – days will include sessions on how to analyse Reputation Risk using a Root Cause approach to develop ways on how to reduce and respond to reputation risk; How to Monitor and Measure Reputation using a 4 – pronged approach; How to Manage Reputation Incidents and Events using processes and techniques such as pro-activeness, communication and readiness prior, during and after a crisis; and will include information on How to Develop a Reputation Protection and Defence Strategy – based on international best practices and appropriate to your organisation.
More information available: http://wp.me/P2PQR-im
Reputation at Risk – Does it still matter?
Yes it does, and latest international research backs this statement. Not only does it back the statement but the research also reveals a struggle to cope with, manage and mitigate this volatile risk.
For a long time, the debate has raged on. Is Reputation Risk a Strategic Risk or just a consequence of a risk?
Perhaps it is because of the misunderstanding that exist in management circles about it. Just because Reputation Risk is the domain of intangibles, does it make it so elusive that we leave it till it is too late, and then try and patch up the embarrassment with PR and fake apologies? Also, to treat it as a simple consequence is not adequate and indicative of the level of thinking that is needed to deal with it appropriately.
Often Reputation Risk incidents have been water shed moments for companies, necessitating whole sale changes to value systems and modus operandi.
In South Africa, there has been many reputation risk incidents that have damaged the names of individuals and organizations a like. We have had our share of naming and shaming, mamparas and Wikileaks moments.. From unauthorised usage of our airspace by the Gupta family to the huge Construction Industry fall-out and subsequent Competition Commission fines to court cases and huge expenditures on Nkandlagate. The list just goes on unabated, which certainly points to a lack of understanding to manage intangibles and perceptions, to manage reputation risk in the Southern African environment.
So, let’s evaluate some of the latest research findings in search of some answers and direction.
On the 15th July, an article appeared in the Risk Management Professional that was called “Is reputational risk management yesterday’s news”?. The article states that a new survey into the emerging professionalization of reputational risk management tells us quite the opposite. It then quotes the findings of a study from Schillings on reputation risk that brought together a group of key practitioners, including general counsel, communications directors, public affairs directors, group heads of risk and CEOs from over 150 leading public and private companies to try and move the debate forwards. After all, this is a shared concern, and as one general counsel at a FTSE100 company remarked: ’Reputation risk will always touch our business somewhere.’
On the 23rd July – ACE Research publishes the findings of their latest study ‘Reputation at Risk’, which was conducted across 15 countries within its EMEA (Europe, Middle East and Africa) region. This study found that “Reputation is the Hardest Risk to Manage. Their findings reveal that 92% of companies believe that reputational risk is the most challenging category of risk to manage.
This certainly ties in with a 2011 Deloitte report that found Reputation Risk to be a “meta-risk” – The Report stated that Reputation is an important factor across all four major risk areas of the Risk Intelligent Enterprise — strategic, operational, financial, and compliance — especially because it is a constantly evolving and fully embedded as part of the why and how a company achieves its objectives.
In May this year, The Compliance Week wrote and I quote: “After financial risk, reputation risk is the biggest concern that keeps board directors awake at night, according to the latest poll from EisnerAmper via Survey Says Boards Troubled by Reputation Risk.
Ace Research’s findings also revealed that while 81% of companies in the survey see reputation as their most significant asset, most of them admit that they struggle to protect it and identifies a number of key reasons why companies in the region often find reputational risk challenging to manage:
- 77% of companies find it difficult to quantify the financial impact of reputational risk on their business, making it harder to measure than traditional, more tangible risks. This is understandable as it is a very volatile risk. Sometimes a small incident can have worldwide repercussions, sometimes it will have no effect. I wrote about this in my post – “One Event. Multiple Stakeholder Impacts”.
68% of companies believe information and advice about how to manage reputational risk is hard to find, compounding the sense of uncertainty and confusion about how best to manage it. This carries another element of truth. Without adequate stakeholder profiling and analysis, issues management and systemic thinking, incorrect mitigation might be the order of the day. No longer is PR the only preferred tool to manage Reputation Risk, what about Governance, Ethics and Compliance functions role and input?
- 66% of companies feel inadequately covered for reputational risk from an insurance perspective. Again the problem exists because you can outsource many risks, but reputation is a risk that is integral to your businesses’ DNA and cannot be outsourced.
56% of companies say social media has greatly exacerbated the potential for reputational risk to affect their business. This is the new world we are living in and it implies more scanning, monitoring and training.
And another report, “With CSR In Global Demand, Corporate Reputation Is At Stake”, (by Cone Communications And Echo Research) stated that CSR is no longer a nice-to-do, corporate social responsibility is now a reputational imperative – or liability. The study revealed in the 2013 Cone Communications/Echo Global CSR Study, that companies are expected to be an active participant – if not a driving force – in solving the most pressing social and environmental issues. Corporations that disregard this consumer-demanded role risk more than their reputation – nine-in-10 global citizens say they would boycott if they learned of irresponsible behavior. This report shows that CSR is now a direct driver of Corporate Reputation and major cause of Reputation Risk.
The Ace Research findings also proposes a number of solutions to adopt, including:
Companies need a clear framework for managing reputational risk.
Effective management of ‘traditional risks’ will help avoid reputational events, and management teams need to put in place a culture and instil a risk appetite across the company that will reduce the potential for crises to emerge in the first place. In addition, taking a multi-disciplinary approach that involves the CEO, PR specialists and other business leaders will also help to build the broader perspective that is necessary for identifying and managing less obvious reputational risks.
My thoughts: I found this interesting as this was the approach that I recommended to Vodacom when I assisted them with embedding Reputation Risk in their Enterprise Wide Risk Management system prior to their listing.These recommendations certainly shows up the Construction Cartel and the need for PR/Reputation Managers to be involved earlier in the risk management & mitigation process. It also implies that the help of OD/Organizational Behavior experts is necessary.
Companies should work harder at measuring how their reputation is perceived. Understanding perceptions of key stakeholders, their interplay and their impact on corporate reputation, is essential for tracking and managing reputational risk effectively. Companies must ensure that they are collecting an “outside-in” perspective to complement their own internal perspective.
Again I rest my case. I have been teaching this in my Stakeholder Reputation Management Master Classes since 2006.
Companies should sharpen up their crisis management plans to keep pace with today’s faster-moving world. Our research suggests that many companies may be over-confident in their abilities to respond to a crisis. Regular review and testing — including the incorporation of social media scenarios — will allow a faster response when disaster strikes.
Again I rest my case. I have been teaching and facilitating the need for Nano-Seconds Crisis Management Plans for a long time – even in China.
The insurance market can do more to help companies manage reputational risk. This includes the provision of more holistic solutions that include crisis response assistance. It also includes helping companies to take a ‘reputational lens’ to more traditional risks to evaluate the reputational consequences in each case. In this respect I work closely with Business Continuity and Health & Safety specialists to advise my clients.
Andrew Kendrick, President, ACE European Group, goes on to say:
“Reputational risk can be difficult to predict. However, some clear pointers emerge from our research as to the source of companies’ key worries. One of these is the globalisation of business, with complex supply chains, expansion into new markets and the challenge of maintaining consistent standards across multiple borders all giving cause for concern. The other noticeable theme is regulation. Post-crisis, compliance has taken on a new importance and businesses of all shapes and sizes are more keenly aware of its relationship to their corporate reputation.
“Insurance is not a panacea for the fast-evolving world of reputational risk. Nevertheless, I believe there is much that insurers and brokers can do collectively to help their clients. This includes the evolution of new more holistic insurance solutions that involve the input of crisis and PR specialists. More generally, professional risk engineering can help to improve risk management processes and governance, allowing clients to manage the more ‘traditional risks’ better and reducing the likelihood of a reputational event in the first place.“
The Schilling researchers asked respondents: ’How useful is your organisation’s formal risk management process when it comes to protecting corporate reputation?’
The response was mixed. On the positive side many communications directors and general counsel rated the risk process as ‘useful’. Interestingly legal respondents were significantly more likely to rate the process as ‘very useful’ compared with those from a communications background. Over 30 per cent of communications respondents to the survey felt that the risk management process was either ‘not useful’ or were unaware of such a process.
One risk manager we spoke to at a leading private company gave us an example of how things work when they are going well: ‘In terms of the communications team and reputation risk, it is dealt with in a high-level and strategic manner. The head of communications prepares incident scenarios. As a risk function we input to those scenarios. This helps to make sure that we have communications and incident response plans in place for our major reputational risks’” However, scenario planning is just one part of the picture.
I fully agree. Reputation Risk is inherent in everything we do. It can be positive or negative. But it needs a dedicated approach and robust thinking processes.
To assist leaders with their questions, struggles and issues I will facilitate a Protecting Corporate Reputation Master Class in Johannesburg from the 22 – 23rd August. This 2 – day training course will provide a deep dive into Reputation Risk and will equip delegates with the necessary competencies (knowledge, skills & attitudes) to protect and defend their organization’s most valuable asset – its reputation against potential threats, risk and potential damage, and is based on more than 25 years research and experience on how to protect business reputations.
The course weaves inputs from best practices in Reputation Management, Risk Management, Communication & PR, Crisis Management & Crisis Communication, Ethics & Corporate Responsibility to provide companies with tools and know-how to protect, defend and deal with reputation risk events of any kind, and should provide you with a strategic direction on how to manage reputation risk in your organization.
To find out more on how to register, click here.
Many organizations fall into the trap of always believing that Reputational Crises are caused by Bad Publicity.
This could not be further from the truth. All Crises or incidents have a root cause, a catalyst that sparked it. Often we only encounter it when it appears in the spotlight.
In a must read in Forbes Bad PR Isn’t Causing PetroChina’s Reputation Crisis – Forbes a lot can be learned.
Reputational Crises have stakeholder impact and influence.
I would take this article and circulate it to all Executives and Management. Then as an Organizational Learning/OD exercise I would ask them to read my post http://deonbinneman.com/2012/08/04/executives-need-to-learn-a-new-style-of-decision-making/
Reputation Risk is rooted in poor decision-making.
The reason for the custom header photo – Reputation is like a flame, easily blown out and fickle unless you keep the flame going.
A person’s or Business’s Reputation needs constant attention – building it, sustaining it and protecting it, and when the time comes that things go wrong – effort and attention to restore it.
I am here to assist you.
In ancient Greece, Socrates was reputed to hold knowledge in high esteem.
One day an acquaintance met the great philosopher and said, “Do you know what I just heard about your friend?”
“Hold on a minute,” Socrates replied. “Before telling me anything I’d like you to pass a little test. It’s called the Triple Filter Test.”
“That’s right,” Socrates continued. “Before you talk to me about my friend, it might be a good idea to take a moment and filter what you’re going to say. That’s why I call it the triple filter test. The first filter is Truth. Have you made absolutely sure that what you are about to tell me is true?”
“No,” the man said, “actually I just heard about it and…”
“All right,” said Socrates. “So you don’t really know if it’s true or not.
Now let’s try the second filter, the filter of Goodness. Is what you are about to tell me about my friend something good?”
“No, on the contrary…”
“So,” Socrates continued, “you want to tell me something bad about him, but you’re not certain it’s true. You may still pass the test though, because there’s one filter left: the filter of Usefulness. Is what you want to tell me about my friend going to be useful to me?”
“No, not really.”
“Well,” concluded Socrates, “if what you want to tell me is neither true nor good nor even useful, why tell it to me at all?”
This is why Socrates was a great philosopher & held in such high esteem.
Next time someone starts gossiping, you know what to do.
An Article in the UK Telegraph caught my attention this morning.
In an article Barclays libor scandal:lock them up Jeremy Warner writes “
Virtually all financial scandals follow the same pattern. First there is the initial exposure of wrong doing, then comes the mitigating claim that it was common practice and everyone was up to it, and finally it emerges that the regulators knew all along but failed to act.
This is a flowchart, but what this article clearly shows is that there is a problem with mind-sets in the Banking world.
Corporate culture i.e the way we intuitively do things is regarded as one of the 3 main culprits in Reputation Risk. By now, it should be obvious that there is a mind-set of greed and taking chances in the Banking world.
It is also well known that Reputation Risk is created by regulatory failures. Hence the importance of Compliance Officers in the New World.
However, what the Competition Commission in South Africa has revealed is that often it is the prevailing level of thinking that causes problems and issues. AND, some of that thinking occurs intuitively. With other words, it has been ingrained in some.
Immediately what comes up in my head is the Cycle of Learning. Moving from Unconscious incompetence right through to Unconscious Competence. Except that Unconscious Competence is the most dangerous stage of learning.
Overcoming this will take a lot of unlearning.
It should also be rather obvious that some serious work needs to be done in the Financial sector by OD (Organisation Development/Organizational Behavior ) experts to create unlearning.
Jeremy Warner ends of the article with a statement – “If this were a pharmaceutical company, it would by now have been stripped of its licenses, closed down and its officials had up for endangering the public”
I fully concur. Years ago someone joked and said: “ Bankers are manicured pawnbrokers”.
Well, it is time that we are no longer pawns. As consumers we have choice. BUT, what happens if an industry can no longer be trusted.
This is the danger that regulators are underestimating.
The World’s Most Admired Company survey by Fortune magazine – see 2011 study results at http://money.cnn.com/magazines/fortune/most-admired/ have been one of the ground breaking annual studies to have been conducted in the field of Reputation and have added much to our understanding of what makes companies great.
But what about those companies that did their utmost to destroy their carefully crafted reputations during the past year (and years). Many companies, institutions and individuals have made this list in the past twelve months.
Perhaps we should start a World’s Most Unadmired Company List. Without being specific, there have been many examples. Many websites and other bloggers have asked their audiences for their thoughts on the matter. Take a look at the examples cited in articles such as:
The Holmes Report – The Top 10 Crises of 2011 – http://www.holmesreport.com/featurestories-info/11377/The-Top-10-Crises-Of-2011.aspx
Australia’s 2011 List – http://prdisasters.com/?p=944
These examples show that no organisation is immune against potential crises and incidents that can destroy their good names. The question that should be arising in your mind is:”What is the potential for my organisation to find its way on to this list?”
- 95% (a lot) of major companies have suffered at least one reputational crisis in the past 20 years
- Major companies suffer a “significant” reversal of fortune every seven years
- One out of two (50%) of these reputational failures were tied to having the wrong business strategy or model; 15% from lawsuits; 10% from merger and acquisition issues. Interestingly, the CEO of Willis Global Solutions Consulting Group said that none of the crises were related to natural disasters until 2011. That is hard to believe since there have been plenty of natural catastrophes over the past 20 years that should have impacted companies such as floods, hurricanes, droughts, food shortages, cyclones, earthquakes, SARS, etc.
Also wanted to mention a recent analysis that came from the 2012 Harris Interactive Reputation Quotient (RQ) and was reported in PRWeek. Harris Interactive reported that advertising has less of an impact on company reputation than social media or new stories.
Research continues to show that word of mouth from news stories with negative information about companies drives perceptions more than we realize.
Weber Shandwick reported in their Company Behind the Brand: In Reputation We Trust that consumers are talking about more about company wrong doing than right doing and advertising may not be as able as it used to be in rehabilitating brand reputations.
The key word now is stakeholders. So many companies have customer service or shareholder programs in place, ignoring their other stakeholders. What are the perceptions of suppliers, the government and the media with regards to your company?
Let me leave you with a question: Who in your organisation has assumed a holistic (systemic) view of managing stakeholder reputation?
If there is no one, your organisation is in danger of making the unadmired company list. If you want to find out more about how you can safeguard your company’s reputation or if you want me to address your management team on this issue, e-mail me.
Time and time again the issue of Social Media is raised in my Stakeholder Reputation workshops. Is it a must? Is it a Stakeholder Engagement tool? What is its value? Should we restrict its access?
Companies are coming to terms with the growth and use of Social Media within and without their organisations and some of the companies that I deal with are grappling with its implications and how to use it in a positive way. Others simply do not allow it and damage their own reputation by not viewing it strategically. Others just implement it without giving adequate thought to potential reputation risk.
The benefits of social media are real, and use of this communications medium as an important Stakeholder engagement tool will likely only increase. However, for organisations to reap the full benefits, it is critical to take a customised, strategic approach to managing the risk of social media vs. reputation.
For me it is important for companies to determine that it fits the purposes of it stakeholder engagement plan and is supported by necessary policies, processes, technologies and roles to manage the risk.
Having a well-designed Social Media Policy is the start. Jeff Bullas define it “A social media policy plain and simple outlines for employees the corporate guidelines or principles of communicating in the online world”.
Companies without adequate social media policies are placing themselves at risk of security breaches and reputational damage, among other issues. Last year, a study from Protiviti Inc., a global business consulting and internal audit firm revealed that the majority of UK employees have not been provided with clear guidance on using social media networking sites.
- Many organisations had no policy in place regarding social media networking
- Many employees were unaware of such policies
- Social media usage in the workplace has grown enormously in recent years with more than half (51 percent) of workers surveyed now claiming to engage with a social networking site whilst at work. Almost a third (30 percent) of workers use sites such as Twitter, Facebook and LinkedIn on a daily basis, while more than five do so several times an hour.
Many organisations do not allow social media activity in the workplace, but this is an unsustainable policy as staff are still able to access social networks from home, posing the same potential risks to the company’s brand and reputation.
In this respect, it is interesting to note IBM’s view. In the spring of 2005, IBMers used a wiki to create a set of guidelines for all IBMers who wanted to blog. These guidelines aimed to provide helpful, practical advice—and also to protect both IBM bloggers and IBM itself, as the company sought to embrace the blogosphere. Since then, many new forms of social media have emerged.
I like Point 11 – “Try to add value. Provide worthwhile information and perspective. IBM’s brand is best represented by its people and what you publish may reflect on IBM’s brand” See more – IBM’s Social Computing Guidelines
The Gap Inc., struggling to make its brands stand out in today’s crowded marketplace, is turning its workforce loose on social media in an attempt to recreate some of the buzz for which it was known in the ’80s and ’90s.The clothier gives each of its 134,000 employees a no-nonsense social media policy titled: “OMG you will never guess what happened at work today!!” The policy serve as a guide to how a large, multinational corporation can strip away the legalese and provide a real-world manual on social media that keeps the company’s best interests in mind. Read more http://www.prdaily.com/Main/Articles/11088.aspx#
In designing your Social Media Policy, I can highly recommend that you also access the following resource: http://www.jeffbullas.com/2010/02/15/only-29-of-companies-have-a-social-media-policy-is-your-company-at-risk/
Common sense is also required. To prevent any online crisis on Social Media networks, you should monitor the names of companies, brands and employees. To ensure this, you need to develop proactive communication strategies to reduce both online and offline crisis. The simplest way to do this is to:
- Create Training Programs that show employees how to use Social Media effectively.
- Share Best Practices that give examples of how others use Social Media and respond to stakeholder interactions
- Develop Guidelines that clarify in simple terms how Social Media should be used and the exceptions you need to avoid when using these channels.
- Monitor how staff use Social Media and made the necessary corrections, adjustments or interactions where necessary using influence & guidance.
Employees will stop using Social Media if they feel there are being policed. Instead adopt a light touch policy where you try to help employees do their job better with Social Media and reward those who get it right.
If you’re looking for ways to control your Online Reputation, then ensure you have a well-designed and communicated Social Media Policy in place, one that focus on what’s important: engaging the stakeholder.
Does Reputation Really Matter?
For the past 15 years I have been speaking and training that it does.
Well it does! My views are now more and more vindicated by on-going international research such as the interesting findings from the Global Corporate Reputation Index study conducted by Burston-Marsteller amongst 6000 companies worldwide and the 2011 Lloyds Risk Index.
Burston- Marsteller’s studies show that Corporate Reputation is underpinned by 2 main drivers namely Performance (Putting your money where your mouth is) and Corporate Citizenship. View the findings on – http://www.slideshare.net/BMGlobalNews/global-corporate-reputation-index
(I find it still interesting that this terminology is used as there is a drive worldwide to just call it Corporate Responsibility)
They found that the average age of the top 25 companies had an average age of 87 years in business with the oldest company having been around for a 147 years. This reminded me of the story about Agatha Christie’s famous play – The Mousetrap that ran at London’s West End Theatre for more than 35 years. Over the years, directors and actors were changed but the standards never wavered. Most certainly a lesson for compliance and adherence to standards of commitment.
What stood out for me is that the world’s most reputable brands set high corporate responsibility standards for themselves and their partners and deliver consistently over time.
These are also the companies that invest heavily in corporate responsibility practices and adherences to codes of standards and conduct like ISO and ensure compliance with these codes of governance and best practice.
These companies also view potential Reputation Risk in a serious light and understand how dangerous it can be in a interconnected world. According to the world’s largest reinsurer Lloyds Reputational risk rose to No. 3, up from No. 9 in 2009, according to the 2011 Lloyd’s Risk Index. View the report – http://goo.gl/NlQRb.
In fact, A 2010 study of the world’s 1,000 largest companies found that 80 percent lose more than a fifth of their value every five-year period because of a major reputational event.
Studies also show that the role of Social Media can no longer be ignored and that these companies have to have a dedicated function to deal with its Digital Reputation and the flow of messages in nano-seconds.
Late last year a new white paper by Deloitte developed in collaboration with RiiЯ Ltd entitled ‘A Risk Intelligent view of reputation – An outside-in perspective” once again highlighted the strategic importance of reputational risk. The report highlighted the fact that Reputational Risk is now regarded globally as a “meta risk, “standing at the forefront of key strategic and operations concerns, right alongside new competition, technology failures, talent issues, and changing regulations.
As executives in the study recognized, reputation, quite simply, can make — or break — a company. Reputation is an important factor across all four major risk areas of the Risk Intelligent Enterprise — strategic, operational, financial, and compliance — particularly of the former two, strategy and operations, because it is a constantly evolving and fully embedded part of why and how the company achieves its objectives.
This catapults reputational risk to what the writers call a meta risk, or a potential menace to fundamental business strategy, and possibly an even greater hazard to organizational survival than a financial restatement or problematical findings in a compliance report.
Read the Report – http://bit.ly/ph6omX
Can you define this Meta Risk in 4 different ways as well as describe the mitigation & prevention strategies required to prevent & respond to the risk that has been called the most dangerous and difficult to manage? I can help.
On the 5th – 6th March I will facilitate an intensive 2- day workshop on how to Manage and Mitigate Reputation Risk for those interested – More information available at http://goo.gl/6WM8M
Many people have asked me why I help companies to protect themselves against Reputation Risk. Why? Well this quote says it all – “If someone is going down the wrong road, he doesn’t need motivation to speed him up. What he needs is education to turn him around.” – Jim Rohn.
My presentations and trainings are dedicated to create the necessary awareness and know-how to help companies to safeguard their fragile reputations.
Reputation does matter, and not only too companies. It is valid for us all. Read my blog post – https://deonbinneman.wordpress.com/2012/01/10/your-name-is-a-precious-commodity why your name is a precious jewel.
Corporate reputations impact brand and product sales performance. That’s one of the key findings from a recent global study by Weber Shandwick called The Company Behind the Brand: In Reputation We Trust.
As the survey report states, “As consumers around the world have greater online access to a brand’s lineage, the influence of the brand parent, or company behind the brand, matters even more.”
The study identified Six New Realities of Corporate Reputation, which the PR firm says serves as reminders that business leaders cannot view their company’s reputation and their product brands as separately as they once did.
These six “new realities” are:
1. The corporate brand is as important as the product brand(s). For instance seventy percent of the respondents said they avoided buying a product if they dislike the company behind it.
2. Corporate reputation provides product quality assurance.
3. Any disconnect between corporate and product reputation triggers sharp consumer reaction.
4. Products drive customer discussions, with reputation close behind.
5. Consumers shape corporate reputations instantly.
6. Corporate reputation contributes to company market value.
In actuality, none of these are truly “new” realities, other than perhaps the ability of consumers to now shape corporate reputations instantly via social media.
What is also very clear from the survey is that Crises like product recalls or any incident involving the company can cause irreparable damage to the brand and reputation.
In reading the report, the value of minimising potential reputation risk became apparent. For instance, if a Reputation Manager paid attention to the top 5 talking points that the research revealed, he or she could develop strategies to minimise the risk before it occurred.
These five talking points are customer service, how employees are treated, company scandals or wrong-doing, and their feelings about the company as a whole (its reputation).
Understanding Reputation Risk and what could destroy value is now a vital competency for any Reputation Manager.
The report also clearly shows that Reputation Matters now even more than ever, with more than 60% of a company’s market value attributed to it.
The report which makes for excellent reading, is available online here