With the rapid rise of social media and a shift in consumer expectations on the delivery of the brands we choose to associate with, reputation is everything.
Take recent events in Australia’s financial service sector where a mix of disgruntled shareholders, the “Twitterverse” and general public opinion collude to take a brand to task, and you have the makings of a reputational disaster which have Board Directors shuffling with discomfort when they read tomorrow’s headlines.
Put simply, it’s always public and generally messy.
But there is a way forward. By assessing how secure your reputation is, identifying the gaps and then developing a comprehensive risk plan, laying the groundwork early can be highly effective in mitigating a potential PR headache further down the line.
Reputation risk expert, Stuart Davies, explains further: “Insurance traditionally deals with causation and effect. Reputation risk doesn’t readily translate in the same way as other classes of risk, as you’re grappling with the challenge of assessing the financial impact of something that is intangible.
“The biggest barrier is trying to financially translate the perception of a risk into a real life situation and the resultant cost of that event playing out. Most insurance responds to a specific moment in time, whereas reputation risk takes both a short and longer term view.
“We’ve seen through a number of recent high profile cases how quickly a well-established reputation can evaporate overnight through one ill-considered move. Gone are the days where the PR gurus massage over the cracks – in the age of social media and instant celebrity status, brands are visible and accountable for everything they do, and every decision they take. This is no different for company Directors and representatives.
“For large organisations it is critically important, more than ever before, to undertake an comprehensive risk analysis and identify gaps where the reputation of the organisation could be vulnerable to attack. Reputation needs to be an integral part of an organisation’s culture and should ideally be sponsored by the CEO.
“Many organisations are underprepared from a crisis management perspective. What’s more, despite having access to market data and customer intelligence, we are not harvesting this information as well we could to identify future trends and potential bumps in the road ahead.
“Reputation risk is a highly specialised insurance category and there are a limited number of insurance carriers willing to provide cover for consequential loss. That’s where the role of an insurance broker is highly relevant in helping clients navigate through a complex market to achieve something understandable and relevant. ”