Reputation Management: Protecting Your Organization s Brand. Beth Rusert June 29, 2016

Transcription

1 Reputation Management: Protecting Your Organization s Brand Beth Rusert June 29, 2016

2 Challenges to Understanding the Impact of Reputation Boards care about reputation, but don t know where to start. It begins with identifying and preparing for strategic risks and includes a broad portfolio of capabilities such as simulation, monitoring, risk sensing, response, and communications. 87% of executives rate reputation risk as more important than other strategic risks 57% of companies surveyed plan to focus more attention on reputation risk in the future *According to Deloitte s 2014 Global Survey Risk 1

3 Challenges to Understanding the Impact of Reputation The c-suite considers reputation a soft investment, but every risk carries reputational risk for brands. 48% of companies state their boards have a plan to address reputational risk fallout; however, only 20% have invested in training to execute the plans. Top-ranked risks are: Reputation (75% identified as top concern) Cybersecurity (61% identified as top concern) Regulatory (53% identified as top concern) Crisis (32% identified as top concern) *According to EisnerAmper 2015 Board of Directors Survey 2

4 We Still Aren t Learning 3

5 We Still Aren t Learning VW Stock Price vs. DJIA:

6 The Difference in Reputation Management Target Chipotle Prepared Better prepared for risk. for Able risk. to Able take to take immediate responsibility for data breach. Invested in solutions for those affected, as well as in education to help prevent future issues. Misalignment between policy and practice led led to to public image crisis. To regain customer loyalty, Chipotle has decided to make changes to their business model.. 5

7 The Difference in Reputation Management Target Chipotle 6

8 Reputation is the Intersection Between Business Strategy and Governance Financial stability Positive social impact Responsible business operations 7

9 Root Causes of Reputation Risks Data breaches: financial and personal health info Perceived ethics failures; fraud, greed Perceived abuse of power Failing to monitor supply chain impact (e.g., food traceability, sourcing) Lapses in customer service Ignoring stakeholder concerns Poor handling of a crisis situation Environmental degradation What company says does not match how it behaves 8

10 Reputation is Owned By Stakeholders Reputation = judgments and perceptions of others Employees Customers Suppliers Investors Advocacy groups Regulators Policymakers 9

11 Understanding the Reach of Reputational Risk: Areas of Reported Concern Customer satisfaction Public perception Product quality Liability Regulatory compliance Integrity Ethics IT issues and security Fraud Environmental risk The Challenge: No one function oversees the different areas vulnerable to risk The Opportunity: Bringing together the diverse functions that impact it *According to Edison Research and Standing Partnership 10

12 Diverse Functions Have Diverse Perspectives 11

13 Diverse Functions Have Diverse Perspectives 12

14 4 Steps for Managing Reputational Risk

15 Step 1: Assign Responsibility Standing Partnership asked: Which department is most responsible for monitoring reputational risk? Audits 13% Compliance 12% Operations 11% President/CEO 28% Communications/ PR 8% A dedicated enterprise risk mgt dept 8% Other 2% Sales 3% Marketing 3% Finance 5% Legal 7% 14

16 Reputation Management Should Be a Cross-Functional Approach Reputation risk should be part of the business culture, transcending the natural silos that develop in operations. Potential risks of independent oversight: All organizations/departments have their own blind spots. Reputational issues can emerge from many areas. Narrow perspectives may not see risks in time to get ahead of a situation. 15

17 Risks of Independent Oversight This fire started with a single lit match on a wooden escalator. Although the fire was spotted, there was insufficient planning, training and collaborative insight across necessary channels to prevent the incident from turning into a tragedy. King s Cross Fire London Underground,

18 Step 2: Audit for Reputational Risk Conducting an annual audit allows organizations to be proactive not just reactive to risks. An audit can: Uncover and address operational issues. Prepare an organization for change, both internal and external. 17

19 Likelihood of Happening Conduct Risk Assessments Reputation risk assessments Identify issues that cause risk to reputation Likelihood vs. expected impact Build plans to address issues Severity of Impact vs. Likelihood of Happening Series14 Series11 Series4 Confusion regarding differences between Series19 internal stakeholders Series9 Political issues within organization Series7 Series21 Series5 Series13 Series1 Series12 Series10 Series8 Series18 Series2 Series6 Series17 Series15 1 Series Severity of Impact 18

20 Step 3: Build Reporting Into Governance Standing Partnership asked: When it comes to your reputation, would you say you are spending? Not Enough Right Amount Too Much Total Had reputational issue Did not have reputational issue

21 Step 4: Monitor for Reputational Issues Standing Partnership asked: How would you rate your organization in? Series1 Series2 Series3 Series4 Series5 Mean Building a positive reputation Managing its reputation Reporting risk assessment to higher management Handling reputational risk after it has occurred Excellent Poor 20

22 Step 4: Monitor for Reputational Issues Standing Partnership asked: How would you rate your organization in? Series1 Series2 Series3 Series4 Series5 Mean Preventing reputational risk before it occurs Identifying reputational risk before it occurs Developing mitigation strategies Building strategic plans for reputational risk management Excellent Poor 21

23 Avoid the Nervous Complacency Give equal attention to protecting the company s reputation as was given to building it Build proactive strategies, rather than reactive maneuvers Hoping that nothing will happen is not a strategy 22

24 Deepwater Horizon: April 20, 2010 BP Stock Price vs. DJIA: Chart: Yahoo! Finance 23

25 HOW ARE YOU MANAGING RISK? Beth Rusert Senior Vice President, Partner Standing Partnership (314) Download the 2016 Reputational Risk Report for more insights