Mind the Gap - Are You Prioritising Brand and Reputational Risks?
In the first of our 'Mind the Gap' Risk in Context series, we look at how an organisation’s brand and reputation must be seen as a strategic asset to be protected and managed. During the course of the year we will continue to discuss potential market coverage gaps and the impact they could have on businesses.
Protecting brand and reputation is an imperative for all businesses. For retail and consumer goods companies in particular, brand and consumer confidence rank as top business concerns in risk registers. Trust is being cited by C-suites as a significant driver of value [note 1]. Consumer opinion is challenging business norms, with firms having to alter ways of working to stay relevant. In the words of Warren Buffett: "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."
Doing things differently requires a heightened appreciation of how the value of intangible assets has increased significantly versus tangible assets for consumer brands firms [note 2]. Corporate crises can be highly damaging to a brand — eroding trust, destroying company value, and ultimately leading to the organisation's failure. Events involving reputation can originate from a number of scenarios, including environmental impact, accounting issues. product recalls, cyber breaches, CEO misconduct, and/or employee behaviour.
Governance and Crisis Communications in the Age of Social Media
Social media places significant power in the hands of the consumer. Crises are shared across social media platforms within seconds and have the potential to overwhelm corporate teams and in today’s global world.
Many companies are still inadequately protected against the consequences of a reputational crisis. It is critical to have a strong governance framework to protect brand and reputation, encompassing:
- Investments in comprehensive crisis arrangements, IT resilience, and business continuity through stress testing and simulation exercises.
- A competent workforce with sufficient capacity and depth to respond swiftly to a crisis, whilst also providing the capability to prevent many events from occurring in the first place.
- A media-trained management team to take control quickly, showing humility where warranted and decisiveness under significant pressure.
Insurance market solutions are developing; they help to protect against intangible risks; these solutions include structured pre-agreed loss-of-profit protection, post-event advice costs, and 24/7 reputational crisis response.
An organisation's brand and reputation must be seen as a strategic asset to be protected and managed. Strong governance frameworks and professional post-crisis responses have been proven to make a positive difference to an organisations long-term survival.
 Agile or irrelevant - Redefining resilience 2019 UK CEO Outlook, KPMG,
 Global Intangible Finance Tracker – an annual review of the world’s intangible value, November 2019 [PDF]