Have you ever stopped to think about what your reputation is worth? Good reputations take years to create, but can be damaged in mere minutes in today’s instantaneous social media world.
If you are the CEO of a company, it is probably something you and your colleagues have considered. Even our personal reputations have value. Whether you are in sales, an SIU investigator, a claims professional, a risk manager or some other type of insurance specialist, your reputation gives you credibility (or not) as the case may be.
Randy Nornes, executive vice president of Aon Risk Solutions, says reputational damage is often the result of a failure. He recommends that companies deconstruct their reputations to see where they are vulnerable. Reputational risk can be internal or external and involves a host of issues that a firm may or may not be able to control.
Before the advent of social media, executives had the opportunity to investigate and shape their responses. Today, they must respond almost instantaneously. Consider the company that is the subject of a tirade on social media from disgruntled employees or unhappy customers. The information may be correct, or it may not. In either case, a response is required.
Aside from financial risks, reputational risk is one of the leading areas of concern for company boards. It is critical for them to consider how their products and services, innovation, leadership, company performance, citizenship, regulators, industry, media and other influencers can affect their reputation, and then create a plan to manage each scenario should a negative situation arise.
Companies with strong social responsibility programs, who are viewed as good corporate citizens are better positioned to withstand a reputational attack. Leaders must respond quickly, be transparent and honest, take responsibility for the company’s failure, and provide a credible plan to address the issue and prevent it in the future.
Executives who do not accept responsibility for a company’s failure, shift the blame elsewhere, and do not set realistic corrective actions will likely see an immediate reaction to their company’s value such as a drop in sales or stock value.
Insurance can help mitigate some of these reputational risks, but understanding and preparing for their impact requires an in-depth look at a business and the many factors that can affect it. Doing the right thing each and every time is probably a good place to start though.