You are a business executive who realizes that your company’s reputation is one of its biggest assets. You updated the crisis plan not long ago and think it’s still current. Things are going well, but you are afraid that there might be something you are missing, something that has slipped under the radar that could cause your company to become the subject of a front-page story, or the target of an activist campaign that could cast your organization in a negative light… You’d like to get ahead of the risk to protect your company’s reputation proactively…Now what?
Here are five steps your organization can take to get a grip on managing reputational risk, backed up by data from Standing Partnership’s 2016 Reputational Risk Report, conducted by Edison Research.
1. Start monitoring for reputational risk
The decision to monitor is a lesson learned the hard way. According to the 2016 Reputational Risk Report, organizations that have experienced a reputational issue in the past are much more aggressive about monitoring (72%) than those who haven’t had problems (44%). To avoid being caught by surprise, start mining for data that’s already being collected, such as customer feedback, financial and software/IT audits and employee surveys. Invest in monitoring external resources, such as business and trade media and social channels. Look for overlapping themes and ask what is causing them.
2. Assign responsibility for managing reputational risk
The survey results show that responsibility for managing reputational risk is divided among many functions. More than one-quarter (28%) of executives said the President/CEO holds the most responsibility. There was nearly an even split between respondents who said it was the audit (13%), compliance (12%) or operations (11%) functions that had primary responsibility. Only eight percent said responsibility lies with a dedicated enterprise risk management department; another eight percent said communications/public relations. Since reputational vulnerabilities can emerge from many areas, a cross-functional team is best positioned to bring together a variety of perspectives that can identify and proactively address reputational risk.
3. Build reputational risk reporting into governance
Make managing reputational risk part of the governance framework of your organization. A noteworthy finding of the 2016 Reputational Risk Report is the marked difference between how different members of the C-Suite view reputational risk. More specifically, presidents and CEOs tend to be much more optimistic than COOs about the effectiveness of current reputation management efforts, giving an above-average grade to the organization for managing its reputation (79%, compared with 65% of COOs) and preventing reputational risks (68%, compared with 51% of COOs). Awareness of this dynamic can help reputational risk management teams weigh these perspectives in their decision-making process.
4. Allocate resources
Most executives (63%) believe their organization is spending the right amount on reputation management. However, respondents who had experienced a reputational issue in the past were much more likely to say spending wasn’t enough. As you embark on a proactive effort to manage reputational risk, set aside dedicated resource (human and financial) to support the mandate.
5. Conduct a reputational risk audit
Bring in a third party to conduct a reputational risk audit to ensure that internal politics and biases don’t influence the accuracy of the assessment. Reputational audits analyze internal and external data, as well as information gathered from interviews with stakeholders to identify weaknesses and serve as the basis for reputational management plans.
Which of these steps is your organization already taking? If you are interested in learning more about reputational risk management, call Melissa Lackey, President and CEO of Standing Partnership at 314-469-3500. To download your copy of the 2016 Reputational Risk Report, click here.