Identifying and preventing the incidences that might harm your firm's reputation can be a challenge at best.
The explosive expansion of Web-based communications and social media has aggravated the risks of reputational damage, while dramatically reducing response time to counter these threats. See Integrating Social Media into Risk Management for strategies to monitor and respond.
According to Reputation Review, a report from Oxford Metrica sponsored by Aon P.L.C., a public company runs an 80% chance of suffering a reputational risk that can cost at least 20% of its equity value in any month over a five-year period. Privately held companies face similar risks.
These exposures can come from a wide variety of sources, from product safety and unhappy customers to regulatory pressures and behavior by managers.
Examples include massive breaches of consumer data held by major financial institutions, the effect on companies that faced supply chain disruptions or radiation fears after natural disasters, and outbreaks of foodborne illness. Although one incident may originate at a single supplier or location, other producers and related businesses often suffer collateral reputational damage.
With reputational risks coming in various and sometimes unpredictable forms, experts recommend that you help protect yourself by:
Early response steps
- Creating an "early warning system" to monitor print, electronic, and social media for negative references to the company.
- Evaluating whether a negative comment should have a response (not every tweet or Facebook post matters).
- Getting frontline employees involved in responding to reputational threats, rather than having top management and PR staff deal with them.
Read more on practical approaches in Understanding Risk Management and Brand Reputation. Our agency's experts stand ready at any time to talk to an agent, help you discuss your risk, review potential scenarios, and then build and test a plan for dealing with events that threaten your reputation.
Having an effective plan to deal with these threats can actually improve your company's reputation.
Frequently Asked Questions
What is a reputational risk?
Reputational risk is the potential for negative publicity, public perception, or uncontrollable events to harm a company's standing and value.
How quickly should a company respond to social media complaints?
Respond promptly where the issue could escalate, but prioritize responses based on severity and potential impact rather than replying to every mention.
Who in the company should handle initial reputational incidents?
Frontline employees trained to escalate issues and a cross-functional response team usually handle initial detection and triage before senior leaders engage.
Can having a reputational response plan help my business?
Yes—an effective, practiced plan reduces reaction time, limits damage, and can improve stakeholder confidence when incidents occur.