Risk Leaders 2015 – IRM event summary
On Wednesday 11th November the Institute of Risk Management hosted the Risk Leaders 2015 event in London. The focus was on risk leaders developing comprehensive strategies to anticipate, measure and accept risks, enabling them to respond better to emerging risks and also better identify strategic opportunities.
alva’s CEO, Alberto Lopez, spoke at the event, explaining that it is crucial for businesses to link performance and reputation, and in doing so, reputation can now be quantified.
Alberto began by clarifying that corporate reputation is not just about crisis management. As we covered in our white paper on Thomas Cook, there are often warning signs that a reputational issue is emerging and escalating in scale. During this “amber” phase there is often the chance to take preventative measures to contain the problem and stop it developing into the “red phase” of a full-blown crisis.
While having the information is important, this on its own is not enough. There needs to be a top down framework in place within an organisation, with the board ultimately taking responsibility for reputation. When it is embedded within an organisation the information can be dispersed among the relevant departments, including risk, communications, marketing, legal and finance.
Alberto used the example of our recent analysis of the cybersecurity breach at TalkTalk to highlight the problems when multiple warnings are not acted on and an incident recurs on numerous occasions. One incident may be forgivable two causes concern, but three is very rarely acceptable and will cause a number of stakeholders to fundamentally re-evaluate their relationship with the company.
Nevertheless, when discussing reputation, it is important to remember that organisations do not just have a single reputation – there are multiple stakeholders each with their own viewpoint. To emphasise this point, Alberto discussed the findings of analysis we carried out after the New York Times published an expose on Amazon’s working practices. This issue was headline news for a week earlier this year, but our data showed that it was not of great concern to Amazon’s key stakeholders (consumers, investors), though it could have repercussions on their future recruitment.
The subsequent visibility of this issue backs up our findings and demonstrates that just because an issue is in the media, it does not necessarily constitute a major reputation risk. This shows that it is important for businesses to understand their various stakeholders, but they also need to understand their own reputational strengths so they can leverage these in times of crisis.
The VW emissions scandal has seen a much longer lifespan that Amazon’s workplace culture, and Alberto explained that while our data showed a steep decline in sentiment for the corporation, customers still view the brand as being strong for quality. While trust may be damaged, this presents VW with an opportunity on which to focus when attempting to win back customers. Again, these findings have been backed up by subsequent reports of little difference in sales and even gains in some regions.
These four incidents are summarised below, but you can read the full reports or download all the latest white papers and reports here.
- Look for the early warning signs
- Don’t let events overtake you – act on your intelligence
- Repeated incidents lead to reputational crises
- More stakeholders affected = longer and more damaging impact
- Know what your stakeholders care about – not the same as what the media cares about
- No company can withstand reputational shocks forever…
- Reputation intelligence needs to be linked to business KPIs
- Reputation can help protect against crises – know your strengths
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