Companies are defined by their reputations – in other words, their brand equity. Although it’s hard to put a dollar value on it, a reputation is a company’s most precious commodity. It can take years to build your brand and stake a claim in your customer’s minds, but only one mistake to send it crashing down.
“Reputational risk management” does not come in the form of an insurance policy -- this is one of those wicked problems you can't write a check to make go away. There is no insurance carrier that writes this kind of policy today [although some have argued there is a need for it.]
Reputational risk management means having a plan of action for communicating and mitigating a crisis, long advance of when you actually need to use such a plan. If you don’t prepare, you will undoubtedly suffer more damage in the event of an incident.
To mitigate reputational risk, get your leadership team together and think through feasible scenarios that could damage your company’s reputation. These vary by industry and company size, but every company is vulnerable in one way or another.
Could a fall at a job site inflict damage on your reputation? A product safety issue at your manufacturing plan? Food poisoning of a customer at your restaurant? A public gaffe by a senior leader? Think through what these things would mean and what resources you would need to respond to the public, your customers, and stakeholders in your company.
There should be a core group of people at your company that develop a plan of action for handling a crisis if something occurs. Identify this key group of stakeholders who should help formulate a response based on the nature on the crisis.
Your plan should designate a pool of people who are authorized to speak to the media on behalf of the company. These should be the strongest in-person verbal communicators at your company. This doesn’t always have to be the president or CEO if they aren’t the best fit for the job.
Consider getting outside training to teach this group of people skills and tactics for communicating with the media. Reporters are notorious for distorting the words of an interviewee, so you want them to be prepared for this style of questioning.
The news environment today is plugged in 24/7. If disaster strikes, you need to move quickly and deliberately. When there is a delay in response, this can amplify the damage to your brand. Lack of communication can cause confusion to internal and external stakeholders and leave room for speculation and false accounts of what happened.
Have a plan on how to notify the crisis communication team in the event of a crisis. This can be as simple as a phone tree or other method to spread the message quickly.
Outline the expectations of each and every employee in the event of a crisis in a policy and have everyone sign off on it. The policy should let employees know who to communicate an incident to first and how. There should also be a procedure for spreading the word internally to minimize rumors and gossip.
Employees should know who is authorized to speak to the media and who is not, and what the consequences are for ignoring the policy. One rogue employee can be enormously damaging if they present unflattering or untrue information to the media in the event of a crisis.
While creating a plan for reputational risk management with all of these elements doesn’t completely insulate your company against a damaging event, it goes a long way toward mitigating this risk. This is something all business owners should think about long advance of any kind of crisis.