With Reputation Risk inherent in just about all processes in a company, Reputation and Risk Managers sometimes find it difficult to determine where the sources of reputation risk resides.
Not only can these risks be unpredictable but they are also extremely varied in nature due to the uniqueness of each company.
However I would like to provide some general guidelines about the generic types of risk. Using these definitions and examples can assist in the development of a reputation risk profile for any brand or reputation.
The examples below are worthy of further discussion and exploration in Social And Ethics Committees, Corporate Affairs meetings and gatherings, and by Organizational Behavior experts and Internal Auditors. Different Disciplines influence and exercise control over the drivers of reputation.
(In order to do this properly, the Reputation Manager should have had training in Critical Incident Analysis and Reputation Root Cause Analysis).
- Read through this checklist and try to think of specific examples that match each of the categories in your specific organisations.
- Describe these in terms of Critical Incident Analysis.
- Get together in groups and share your examples.
- Play What if Games – What could be the impact on your organisation if this had to happen?
Thoughts to Ponder
Please note – this list is not exhaustive and any other areas that come to mind should be noted and explored in the same manner. Each company is unique.
Reputation Risk Examples
Brand attack: where the brand or image is knowingly attacked by others who might have a vested interest in the demise or decay of your business.
Example – The Gordon Ramsey Kitchen nightmare incident with the bakery in Nevada, where the owners misunderstood his advice.
Price wars: where the competition undercuts profit margins that prove to be unsustainable and your company cannot compete.
Brand confusion: where one brand is confused with another and suffers as a result of the confusion.
Slip of the tongue or “finger”: where a casual or flippant remark in a conversation or on Social Media can lead to a detrimental interpretation.
Example – The Peggy Sparrow tweet incident in South Africa.
Health and safety issues: where the brand or image is likely perceived to be harmful.
Examples – Ford Kuga recall. Companies found not be compliant with OHASA and the impact of the DEpt. of Minerals and Energy’s requirement when there is fatality on a mine.
Quality issues: where doubts are cast on the suitability of the product or service or the value for money it represents.
Example – See Ford Kuga above.
Legislation: can affect the brand or image in all sorts of ways. Infringements of existing legislation are one aspect and changes of legislation are another.
Examples – The application of the Consumer Protection Act in South Africa and the rise of the role of Compliance Officers in companies.
Trade barriers: where restrictions are imposed or removed. This may be a direct impact where a company’s products are subjected to changes or it an indirect impact where someone elset products or services are subjected to changes.
Example – In South Africa we refer to sherry but in Europe we can only sell it as fortified wine.
Translation problems: often occur when a namef a phrase or a title has a rather unfortunate meaning in another language. They can also occur when the quality of the translation is poor and the meaning gets lost or distorted.
Example – The story goes that the late Louis Luyt tried to market a brand of beer in West Africa that could not sell, until research revealed that the name of the beer meant weak in local dialects.
Economic Forces: those local or international forces that may have serious financial consequences beyond our direct control. Often the brand can suffer as a result of the response to such variations.
Example – The Downgrades by the Rating Agencies.
Religious issues: where the product or service has a religious connotation. Sometimes this is intentional by the nature or design of a product or it may be purely accidental though incomplete knowledge of others’ beliefs.
Example – The rise of anti-american sentiment in the Middle East impacted Cooc-Cola’s sales.
Racial issues: those where the product or services has a racial connotation this would normally be purely accidental through lack of knowledge or it might occur through some change of fashion or custom.
Example – This could also refer to issues of gender. Racial issues currently are top of the mind awareness in South Africa, and many times there are cases where racist remarks has impacted speeches, sentiment and product usage.
Environmental issues: where the public, or sections of the public, have real or imagined concerns about the environmental impact of a product in its manufacture, distribution or its use.
Example – The rise of activists campaigning in South Africa. Activists assist with water quality issues, land misuse and even the relocation of spiders as in the Eskom Medupi spider relocation.
Animal rights issues: where the public, or sections of the public, have real or imagined concerns about the impact on animal life. These issues are often concerned with research and development programmes which may, or may not, use animals for experimental purposes.
Example – Social Media is rampant with abuse of anmal cases and outcries.
Human rights issues: where the public, or sections of the public, have real or imagined concerns about their rights or the rights of others.
Example – The South African Government tightening up on passport controls to reduce human trafficking.
Implication by association: where a company, its products or services are deemed to be in league with others who have a poor image some reason or another.
Example – The South African State President Zuma is tainted by his close relationship with the Gupta Family.
“Acts of God” or Forces of nature: where the destructive forces of nature have a detrimental effect on the way in which a company sources its materials, creates its products or delivers its services. In a long and complex supply chains there are often many opportunities for nature to interfere.
Example – Earthquakes or inclement weather.
Personal issues: where the brand, or image, is liable to suffer simply because of its association with an individual who appears to have offended the public though his or her actions, words or beliefs.
Criminal acts: where someone closely associated with the brand or image appears to have committed a criminal act.
Power and Misuse of Influence: where people with vested interests use their positions such as money to unduly influence situations.
Example – The Gupta “ State Capture” and the constant interventions by the Competition Commission.
- Use the information gathered to develop a profile of potential threats to your brand and reputation.
- Develop a list of mitigation strategies on how you will overcome each challenge.