Your business’ reputation is an intangible commodity, unable to be properly measured, and yet is highly susceptible to public opinion. Regardless of what industry your company operates within, each interaction—whether it be your website, your product, your services, a face to face meeting—you have with the public will help shape your reputation.
What is Reputation Risk?
Reputation risk is the threat of danger associated with the ethics and quality of your company. It has the potential to result in lost revenue and a damaged public image. While your company is intrinsically tied to its reputation, you do not and cannot own it—its reputation is controlled by the public. The intangibility of your company’s reputation is the central challenge that you will need to overcome.
Your company’s reputation is fragile and vulnerable to public opinion and things like negative online reviews. Each channel that is linked to your company offers its own unique risks. Yet, some are more damaging than others, such as managing a foreign supply chain.
Foreign supply chains offer companies a compromise: inexpensive cost for limited control of the operations. However, this trade-off could expose your company to unethical or unfavourable business decisions—if a supplier engages in either, your company’s reputation can be affected. Therefore, you need to monitor and refine your business channels to mitigate the risk of your reputation irrevocably eroding.
A Crossroads for Your Reputation
At its core, reputation is a matter of trust that your company fosters between clients and the public. Often, a crisis presents a company with a crossroads—depending on how the company manages the various aspects of that crisis will have great effect upon it going forward. If your company mishandles a crisis, you risk breaking the trust that you worked to establish. The consequences of improperly managing a crisis can be catastrophic. Here are just three consequences threatening your company’s reputation:
- The quality of individuals that are seeking employment with your company could diminish, or current employees may leave.
- You may have to embark on costly and time-consuming campaigns to earn back the lost or damaged trust.
- You may experience loss of business during the period of time when your company’s reputation begins to diminish.
However, the reverse is true as well—if your company is successful in managing a crisis, you have the potential to earn a great deal of reputational credit. Appropriate crisis management at your company may generate the following three benefits:
- Restoring lost revenue from a crisis, along with the potential to increase revenue
- Solidifying and strengthening your company’s reputation as a trusted brand/authority
- Increasing exposure for your company, which could result in attracting new clients and new buyers
How your company handles a crisis is determined by the strength and depth of your reputation risk management plan.
Best Practices for Managing Reputation Risk
A diverse and detailed reputation risk management plan provides your company with strategies on how to best monitor your business channels, and help shape public opinion in your favour. Follow this guidance to effectively manage your organisation’s reputation risk:
- Develop an effective early warning system designed to monitor news about your company.
- Foster a professional relationship with the media in order to better monitor how your company is perceived.
- Utilise social media and the Internet to proactively and successfully shape your company’s reputation.
- Foster and manage professional relationships
- Choose individuals to represent your company who connect well with the public and embody your goals and ideologies.
While this is not an exhaustive list of practices that could benefit your company’s risk management plan, it does provide a point of reference when you are shaping your plan. For more information about how to effectively manage your reputation risk and prepare your organisation for future success, contact your Edison Ives Insurance Solutions representative.