Reputational risk is often overlooked and underestimated, but it may be the most potentially devastating threat to a company today. One only needs to look at the impact that a scandal can have on public perception of a company and its overall revenue.
Business leaders have come to recognize that intangible assets like reputation have steadily become more important than even the tangible products that a company sells! In other words, reputation drives business results.
Given that reputation is so important to the entire company, it is a perfect risk for an ERM framework –Matherly Angela. Since the whole company can be affected, the whole company needs to help manage the risk and this involves making sure that crisis management and crisis communication plans are in place, Public Relations firms are engaged before an issue occurs, executives and spokespeople receive media training and that a business continuity plan is in place.
Companies can choose to do it themselves or they can turn to an insurer to help transfer the risk. Either way, successful mitigation is all about “maximizing the time between when the event occurs and when the media gets a hold of it. As Kieron Russell puts it-the ‘Golden Hour’ (And these days, that “Golden Hour” can sometimes be more like “Golden Minutes.”)
By considering this important time period, which means being prepared beforehand, companies can then reduce the time it takes to regain whatever revenue might be lost because of a reputational event.
Although it takes a lot of good deeds to make up for a bad event, but considering the stakes, it seems that a sound reputational risk management program is essential to making sure that you will need fewer of those good deeds to make things right!
Coming Next….Key points to consider when building a reputational risk management program