A strong reputation has the potential to be your largest asset, but just
one crisis could irrevocably tarnish your image and ruin your business.
According to a recent survey from Deloitte, the largest professional
services network in the world, 87 percent of business executives believe
that reputation is their largest risk area, and only 19 percent of
respondents think their business is adequately protected. In order to be
prepared, you need to identify and mitigate the potentially devastating
risks to your business’s reputation.
Health and safety incidents, product recalls and regulatory investigations
are just a few of the incidents that have the potential to damage your
reputation; and, now that social media and other online sources have
accelerated news coverage, you may only have minutes to respond to a crisis
and protect your image. The failure to quickly and effectively address a
crisis can result in lost business, litigation, regulatory fines and more.
The Many Forms of Reputational Risk
The damage to a business’s reputation is often the result of other risks.
For example, a cyber attack that disrupts your business operations is
generally not considered a risk to your reputation. However, an extended
disruption could cause customers to think less of your business and its
Here is a partial list of risks and events that can cause damage to your
Product recalls or concerns over product quality
Allegations of poor or improper business practices
- Health or safety incidents, involving either employees or customers
- Regulatory investigations
Negative associations with third parties
The Role of Social Media
Social media can be a powerful tool to connect with customers and extend
the reach of your business, but it can also be used to quickly spread
negative publicity that can severely harm your reputation.
In an increasingly connected world where anyone with a smartphone can act
as a journalist, any negative experience a consumer has with your business
has the potential to go viral and be seen by thousands—even millions—of
people. Make sure that your business has a social media presence that is
constantly monitored, and that it quickly responds to any criticism or
negative customer experiences in order to maintain your reputation.
Online review services can also damage your reputation and result in lost
business. According to Dimensional Research, 90 percent of customers check
online reviews before buying products, and 80 percent make decisions based
on what they read. Clearly, the best way to ensure that reviews for your
products and services are positive is to maintain effective and
comprehensive quality control procedures. However, it’s important to
regularly check online sources to get feedback on your products, and to
identify malicious or fictitious information that could reflect poorly on
Strategies to Lower Reputational Risks
There is no such thing as complete protection from the risks to your
reputation, but there are strategies you can use to limit exposure and
respond to a potential crisis:
Create strong, relevant corporate values:
Upper management should create—and regularly communicate—strong
corporate values that permeate every level of the business. Though
these may be created by upper management, they should reflect the
values of all of your employees and stakeholders.
Integrate a risk evaluation into business planning:
Identify the opportunities, threats and assumptions that accompany your
business’s plans and strategies. Don’t assume that longstanding
strategies or well-developed plans are free from reputational risks;
instead, develop hypothetical scenarios to identify how your reputation
could be affected.
Promote positive interactions with customers and other
You can strengthen your reputation before a crisis occurs by aligning
your goals and connecting with your stakeholders. Customers appreciate
regular and positive interactions, and you can use social media as a
tool to reach out to them.
Develop a reputation plan:
Train everyone at your company on how to recognize a reputational
crisis, and put together a response team. Your plan should identify all
potential risks to your reputation and map out a response for each.
These responses should include key statements that identify at least
three talking points and restate your business’s core values. If a
crisis occurs, distribute relevant messages as quickly and widely as
In the event of a crisis, it’s important to respond quickly and decisively:
- Don’t sacrifice your reputation to protect your finances or products.
It’s usually more prudent to recall a dangerous product immediately; for
example, if it’s discovered that you delayed a recall at the expense of
health or safety, your reputation may suffer a serious blow.
- Respond to questions and concerns. If you attempt to stay under the radar
during or following a crisis, it will only cause negative attention to
linger. Instead, respond to any concerns and continue to communicate your
- Always remember the broad range of your reputational risks. Following a
crisis, it may seem easy to only focus on preventing a similar incident in
the future. Be sure to keep all of your risks in mind.
Limit Your Risks
It’s inevitable that every business will experience some form of
reputational damage, but there are ways to limit your exposures and to
cover losses. Contact Robertson Insurance & Risk Management today to
identify your unique risks and protect your business.
Robertson Insurance and Risk Management is here to help you through all of your risk and insurance needs. Contact us today for your assessment! 717-625-3770