People don't have to look far to find examples of organisations making decisions that result in reputational risk management crises. Almost daily, there are examples of company representatives making an error of judgement which sees their organisation's reputation fall under public scrutiny.
Whether it's a joke in an advertising campaign that offends an audience or a notable product failure, there are a range of different events that can test an organisation's communication strategies. In many cases, the best solution involves a quick and transparent response. However, a recent survey from Deloitte found this preparation is lacking worldwide.
How many leaders are prepared for a crisis
Strategic planning informs the success of any aspect of business operations, yet Deloitte discovered these preparations are overlooking a key function of an organisation – the ability to respond effectively when something goes wrong.
While many studies detail the original impact of reputational risk management on a business, few investigated just how long it takes organisations to fully recover. According to Deloitte, the majority of Australian businesses are taking between one and three years to repair reputation damage.
For an unlucky 10 per cent of affected businesses, this process is stretching beyond the four-year mark for both reputation and financial repair.
According to Deloitte's Lead Partner Crisis Management Graeme Newton, businesses can't afford to assume that their current operating procedures are robust enough to protect them from possible reputation crises.
"The critical thing is that it is not a matter of 'if', but 'when' the business will experience a crisis," he explained. "More than half of the businesses surveyed (53%) had experienced a crisis in the past five years."
What to consider when planning a solution
One of the most important aspects of any reputational risk management crises will the demographics of the audience. When organisations look to communicate regarding what went wrong and what the solution is, it's essential to consider who they will be speaking to and through which platform.
Millennials are regarded by many as the current largest generational group, and often considered to possess their own unique world views. For this group, McKinsey & Company advises immediate and two-way communication methods, a technique often supported by enterprise social media use.
Risk consultancy Protiviti also noted that there's an important strategic angle to effective risk management and that these concerns should be united with financial planning as well.
In the future, reputational risk management is likely to develop even closer links with the other elements of business strategy.