• Is reputational risk management different for small businesses?

    The suggestion that small businesses are the backbone of the country's economy is thrown around a lot, but this doesn't make it any less true. In fact, according to the Australian Bureau of Statistics, these organisations account for 97 per cent of all businesses around the country. 

    In many cases, these enterprises have their own unique concerns, as their small number of employees means their leaders are often limited in the tasks they can perform on their own. Some key roles may be outsourced to other agencies or contractors, and a range of different functions may seem like an unattainable luxury. 

    This is particularly true when it comes to reputational risk management, a practice that small businesses may see as unique to larger organisations. However, will this attitude protect their organisation?

    Small businesses can't afford to ignore crisis management

    Recently, Optus interviewed Dr Tony Jaques, the managing director of crisis management advisor Issue Outcomes. According to Dr Jaques, small businesses can't ignore the demands of reputational risk management. Reputational risk is common to organisations of all sizes and public perception is crucial for small business success.

    Dr Jaques does admit that larger organisations often have more to lose in these events, and are more likely to see their errors make headlines. However, this doesn't mean small businesses get a free pass in this regard. On top of this, he says the excuse that crisis management is too expensive for smaller businesses is not always a valid one. 

    "Even a basic crisis management plan may save your business from being the one in four which does not survive a crisis," he explained. "You don't have to commit a lot of money and resources, but you do have to consciously want to do it."

    There are a number of viable yet cost-effective ways small businesses can reduce their susceptibility to these events, such as having plans in place and being aware of the various reputational risks they may encounter. 

    Identifying risk in small businesses

    Certified Practicing Accountants (CPA) Australia produced a guide for the country's small businesses that helps them to identify the areas of their operations most likely to contribute to reputational risk. 

    Like all businesses, smaller organisations can be influenced by their supply chain. If they're found to be using controversial products, resources or services, it could damage their public perception. While these companies have a much smaller staff, employee actions can still influence the way they're viewed by the public as well.

    Ultimately, while the scale of reputational risk may increase as a business grows, no company is immune. It's up to small businesses to acknowledge this fact and plan a risk management strategy that meets their needs. 

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