Risk Advisory Partner, Catherine Waugh, explains why your company's reputation is important, especially in a country like New Zealand where the ability to recover in a small market can be challenging.
In 2015, numerous global organisations lost over one third of their market share value as a result of either poor management of an operational crisis event or a specific reputational issue. In New Zealand, public memory is long and the ability for organisations to recover in a small market is challenging.
Equally, in an environment where public expectation is continually rising, for example, in relation to information or privacy breaches, a reputation which has been built up over many years can be dramatically impacted by the smallest of mistakes. Reputational crises often have personal impacts, and in some cases, these have led to the departure of senior leaders.
Your reputation is most at risk when you fail to demonstrate complete transparency and guardianship in public both in the day to day running of your business and in a crisis situation.
Building reputational resilience requires effective risk management and crisis preparation. Understanding the stakeholder landscape is critical in this context and it will typically reflect a broad and diverse group each with different priorities, attitudes, roles and levels of influence.
Your reputation is driven by the interaction between these different groups in response to what your business is seen to do. In a country as small as New Zealand this may mean being the front page news for some period of time until a bigger news event occurs.
Don’t be front page news - what questions should you as a business owner be asking
- Does our risk register adequately reflect our reputational risk and are we managing these?
- Do we understand all our stakeholders and their perspectives?
- Who is responsible for reputational risk in our organisation?
- Have we considered sector-wide risks to identify opportunities to enhance our reputation?
The Deloitte UK office recently released a report on how to develop 'reputational resilience'. It was an important reminder to us, that when we look at 'risk' as a whole, we must not forget this side of it.
The report highlights two fundamentals in building reputational resilience
- Identifying risks from an 'outside in' perspective
- Preparing for a crisis through a robust crisis readiness programme
In a recent survey (cited in the Deloitte UK report), board members globally, identified reputational risk as the area where they felt most vulnerable, but only 39% had a plan to address a reputational crisis.
Looking ahead, it will be the organisations and businesses that understand, protect and develop their reputation assets that will be best placed to maintain their value.
Read the full report .