Whose responsibility is managing reputation risk? The CEO? The Board? The PR Department? Every employee bears some responsibility for the identification and management of risks to reputation, says Deon Binneman.
However, members of the Board play a crucial role in setting the tone. There is no 'one size fits all' solution to managing reputation risk.
Reputation can be regarded as a source of risk in its own right and/or as a consequence of other risks occurring. For instance, an accident in the workplace due to poor company standards can destroy a company's carefully constructed reputation as a preferred employer. The critical issue is to ensure that all major risks are comprehensively identified and prioritised and that appropriate action is taken to manage them. Key Components
Leaders in reputation risk management have put the following components at
the heart of their approach: A clear vision: 'what we stand for and are prepared to be held responsible for'.
Clear values, supported by a code of conduct, setting out expected standards of behaviour.
Policies clearly stating performance expectations and 'risk tolerance' in key areas.
Understanding of stakeholders' expectations, information requirements and perceptions of the organisation.
An open, trusting, supportive culture.
A robust and dynamic risk management system which provides early warning of developing issues.
Organisational learning leading to corrective action where necessary;
Reward and recognition systems which support organisational goals and values.
Extension of vision and values to major partners and suppliers.
Open and honest communications tailored to meet the needs of specific stakeholders.
The Business Case
There is overwhelming evidence (research studies such as the World's Most Admired Company Survey), that a good reputation enhances profitability and contributes positively to longer-term success. It does this by implementing high impact intellectual capital practices, maintaining customer and supplier loyalty, attracting investment and bolstering competitiveness, to mention just a few of the key drivers of reputation.
The ability to manage reputation and its associated risks effectively will become a key competence in an increasingly competitive and borderless world.
1. What are you doing to manage this in your organisation?
2. Are you leaving it to chance?
3. To a single department to manage?
Leading through a crisis guide
To help business leaders better cope with a crisis, Inc.com has assembled its best articles on the topic. Use these articles to put a plan into place that will ensure you and your business can effectively face and survive the challenges adverse incidents can present. Go to: http://trax.inc.com/k/w/mailman/inc_connection/20030401/guide.