This post was originally published on AllBusiness.com
The United States Federal Reserve defines reputation risk as “the potential that negative publicity regarding an institution’s business practices, whether true or not, will cause a decline in the customer base, costly litigation or revenue reductions.” Over the past five years, this risk has grown exponentially and is considered a central strategic risk for companies today.
According to Henry Ristuccia, global leader in Governance, Regulatory & Risk Strategies at Deloitte, “The rise of reputational risk as the key strategic risk is mirrored by executives listing social media…as the biggest technology disrupter and threat to their business model.” Social media provides a completely democratized, real time (and potentially anonymous) publishing platform for anyone to publish information about anything.
This risk, according to Deloitte, has grown over the last five years from a peripheral consideration to the number one strategic risk. Consider an excerpt from Deloitte’s 2013 market assessment, Exploring Strategic Risk: “Reputation risk is now the biggest risk concern, due in large measure to the rise of social media, which enables instantaneous global communications that make it harder for companies to control how they are perceived in the marketplace.”
The Internet is a vast landscape where any number of internal or external factors may hurt a company’s reputation, including negative reviews on sites like Yelp, bad press from exploited security vulnerabilities, or even personal vendettas against company leadership.
Attempting to stay relevant in a fast-paced digital environment has proven to be a tall order for traditional PR and marketing teams. This trend necessitates increasingly agile and proactive solutions.
Here are three ways to ensure that your company is taking the right precautions to mitigate reputation risk:
1. Be Proactive
The first step in a successful strategy is to take inventory of the information that is already published about executives and develop strategies to increase the relevance of positive information. Company leadership, top executives, and public facing positions are obviously among the most important positions when considering reputation risk. Mitigating reputation risk starts at the top.
Second, utilize a monitoring solution. Available solutions range from personal, individual monitoring of search engines and social media like Google Alerts and Hootsuite, to enterprise level software that can provide insight and allow response across various platforms in real time.
Assessing your exposure and creating a monitoring policy for top executives is essential to mitigate reputation risk. Ensure that you are aware of what information exists online and have a system to notify you when new information appears about your business and its leadership.
2. Build Assets
As the saying goes, “The best defense is a good offense.” The same applies to assessing reputation risk in an organization.
After understanding potential targets and available web properties, the next step is to regularly release well optimized content that will rank highly in search results. Even if negative news is published, establishing well-rounded online personas and regularly publishing information is the most effective way to ensure that situations can be contained.
This is true in proportion to an organization’s size. As the Deloitte study indicates, “Customers are able to make decisions on an organization based on social media comment, potentially well before your ability to be able to defend or articulate a response.”
Examples of this are everywhere. It requires very little time to compose a 140 character tweet, and even less time to retweet it. Ensuring that negative information will not exist in a silo is an imperative way to mitigate reputation risk.
3. Have a Disaster Plan
Once again, reputation risk is the number one strategic risk for companies today. It is important to remember that no one is immune. Some reputation risk situations will catch you off guard, others will come with a warning. Either way, reaction time counts.
Companies and executives may not have a choice about the timing or context of being placed in the spotlight, but they can be prepared to turn negative press into positive attention. After all, in 2002 Tylenol gave Johnson & Johnson a chance to demonstrate outstanding integrity, and the world has yet to forget.
Turning negative situations around for positive, long-term outcomes may require thinking outside the box, unconventional approaches, and extremely talented marketers, but a situation can usually be improved with proper planning.
Conclusion
Mitigating reputation risk is not optional for companies today. The speed at which reputations can be destroyed online can cause serious financial damage for companies that are not proactive about enumerating likely targets and building web properties with positive, accurate information around them.
Automated monitoring solutions are widely available depending on specific needs, and using them will ensure a better reaction time in the event that your company realizes a reputation risk. Customers assess and respond to situations in real time; ensure that your company and its executives are represented with timely responses and have a plan of how to handle situations when they arise.
Armed with these strategies, you and your organization should be better prepared to mitigate reputation risk.