As the world has clambered to recover from the financial crisis, organisations are realising that the biggest risk does not come from their balance sheet, but from something far more abstract which resides within the mind of all stakeholders – a company's reputation.
While this may be a difficult asset to quantify, it is incredibly easy to see the value in curating a strong reputation, as it is central to many aspects of business survival from attracting top talent to protecting market share.
Reputational risk management front of mind in 2016
Aon's latest Global Risk survey found that for the first time since 2007, damage to reputation or brand came in at the top of the list.
With today's permanently spinning news reel and permeation of social media into virtually all stakeholder domains, companies need to be both vigilant and diligent in managing their reputation. When a crisis hits, it can spread faster than wildfire, so it is essential to have thorough risk management and crises response plans.
Reputation is a major issue because it is not traditionally insurable. Therefore, if a crisis was to occur, the ensuing damage may never be remedied. In recent years, many companies have folded due to high-profile and crippling crises, but combined with the increasingly complex communicative landscape, companies are not overly confident in their ability to manage reputational risk.
Companies not confident in crisis response capabilities
Only 19 per cent of companies feel that they can rebound from a reputational hit adequately, according to a Deloitte study cited by Aon. In fact, 39 per cent felt that their risk management programs were either average or below average.
Therefore, it is to be expected that The Holmes Report noted a key corporate affairs trend in 2016 to be proactively managing is reputational risk. Vivian Lines, chairman of the Asia-Pacific region for Hill+Knowlton Strategies contributed to the discussion, opining that the accountability movement has just begun, and organisations need to be prepared in order to survive.
"Companies are going to be held up to even higher standards of scrutiny than we have seen in ," she predicted.
So to ensure an organisation can survive through this uncertain and potential tumultuous time, all communication needs to be glued together by effective leadership, a strong company culture, and a clear moral compass.
Carefully constructed communication may not be enough, for unbiased truths are far too easy to access. Those companies that don't espouse accountable and ethical corporate communication principles will struggle to maintain credibility in today's consumer-driven environment. Those that succeed will understand that contrived messages can spell crisis.