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Crises in reputation management that threaten the stability of business come in many flavors – technological, financial, intentional, unintentional, and so on. When you’re ill-prepared to deal with issues that arise or manage them poorly in the heat of the moment, a crisis can cost you your reputation – and your job. Read on to learn why business leaders need to care about reputation management and crisis planning right now.
Gartner’s #1 Trend Identifies Cyber Security as a Reputation Management Risk
Renowned analyst firm Gartner Inc. recently identified the top six security and risk management trends facing business leaders around the world. Numero uno is all about the ability of organizations to achieve their business goals and protect their corporate reputation in times of crisis.
Trend #1: Senior Executives are Becoming Aware that Cyber Security Breaches Pack a One-Two Corporate Punch.
Case in Point: Equifax
In September 2017, credit reporting agency Equifax experienced a massive data breach affecting more than 143 million U.S., Canadian and British citizens. Over a 2½ month period, hackers made off with a lot of highly sensitive consumer information by exploiting a known vulnerability in the open-source software used on the company’s website. They absconded with birth dates, home addresses, driver’s license and social security numbers, and more – data that could be exploited to create stolen identities, take over bank accounts, or worse.
One week after the data breach was made public, Equifax announced that its chief information officer (CIO) and chief security officer (CSO) were retiring, effective immediately. Then, on September 26, CEO Richard Smith stepped down. In an op-ed on USA Today’s website, Smith stated, “This is the most humbling moment in our 118-year history. We apologize to everyone affected.”
Equifax shares tumbled 27 percent shortly after the attack, and the carnage didn’t end there. In the weeks after taking over for Richard Smith, Equifax Interim Chief Executive Officer Paulino do Rego Barros Jr., publicly apologized for the company’s messy response, acknowledging that answers to questions were delayed, incomplete or both.
By the end of 2017, the cost of the cyberattack was calculated at $439 million – including legal fees, identity theft services for those affected, technology and security upgrades, and so on. Research firm Ponemon Institute estimates that the final cost of the data breach could be $600M+ once lawsuits and government investigation expenses are factored in. Ouch.
While the Equifax debacle is an extreme example of how a malicious, cyber-driven incident can sink your reputation, the underlying messages should not be ignored. In a time of exploding cyber security threats, organizations need to do everything possible to quickly boost their cyber resiliency with advanced operational visibility and cyber security tools. And, they should have a solid plan in place to manage a reputational crisis when it occurs.
One analyst commented that given Equifax CEO’s track record of success, he might have tried to “weather the storm” rather than resign. We’ll never know if the former CEO could have found a way through the corporate and personal reputation crisis to the other side.
Does Your Organization Have Corporate Crisis and Reputation Management Plans in Place?
What type of crisis can cost you your reputation and your job? The answer is – every single one of them.
Crisis situations usually occur without notice, particularly in the industry sectors Standing Partnership specializes in – such as industrial, agriculture and health care. Today, who you are as an organization and how you respond in times of duress are just as important as what you do.
Gartner Research Vice President Peter Firstbook noted that business leaders should connect the dots between IT security issues and business viability. We’ve seen firsthand that leaders who step outside their daily operations to proactively examine issues that could undermine their reputations are more likely to navigate successfully through volatile markets and times. Without a corporate reputation strategy in place, your revenue, productivity and shareholder value are at risk.
The good news is that tools like our Risk Audit are available to help you identify, assess and prioritize your reputation vulnerabilities. And resources, such as our reputation management experts, can help you develop a strategy designed to mitigate risk, build resilience and protect your brand in the short- and long-term.
To learn more about the steps involved in developing a corporate reputation strategy and creating a crisis management plan, check out these free resources:
- E-Book: Reputation Management – An Inside Look
- Guide: The Complete Guide to Crisis Communications Planning
- Gartner Inc: Gartner Identifies the Top Six Security and Risk Management Trends
- ZDNET: Equifax says more private data was stolen in 2017 breach than first revealed
- PYMNTS: Equifax Breach To Cost Total Of $439M
- NYTimes.com: Equifax Says Cyberattack May Have Affected 143 Million in the U.S.
- Bloomberg: Equifax Breach To Cost Total Of $439M