The saying goes, any PR is good PR. In today’s world, when anyone or anything, whether it’s a company, an executive, retailers or a major brand, can be under the Internet and social media microscope – not all PR is very pleasant at all actually.
As a matter of fact, the Deloitte Reputation Risk Survey shows that more than anything, a bad reputation is one of the top risks companies are facing today.
According to Deloitte, what was interesting was that “…the World Economic Forum, on average found more than 25 percent of a company’s market value is directly attributable to its reputation. And in a highly connected world where customers, operations, supply chains, and internal and external stakeholders are scattered across the planet — and where reputations can be globally attacked ….”
The Deloitte report is based on a global survey of more than 300 respondents from the Americas, Europe/Middle East/Africa (EMEA) and Asia Pacific. Nearly all respondents were C-Level executives board members or specialized risk executives.
What the research found and what many know from just reading the online media, it doesn’t take much today for a negative blog, comment on Twitter or Facebook to begin a whirlwind of rumors and speculation (true or not) that cause much risk to company. Deloitte found that “Eighty-seven percent of the executives…surveyed rate reputation risk as “more important” or “much more important,” and 88 percent say they are explicitly focusing on reputation risk as a key business challenge.
Most agree now, a reputation risk can escalate from a bad day to a very crucial crisis.
So what exactly causes a reputation risk today? Deloitte points to a number of measures from issues around company integrity, fraud and breaches. Companies today are even put under the pressure cooker if one of their partners or vendors are caught doing unethical business.
An example of a risk that may be somewhat outside a company’s immediate control is a security or data breach. This issue has affected hundreds of top companies and their customers. According to the Identity Theft Resource Center, there were 783 data breaches in 2014. In addition, the Federal Trade Commission (FTC) recorded 332,646 identity theft complaints in 2014, an increase from 2013.
The light at the end of this rather dark tunnel has shown that many companies are taking steps to manage their reputation – not just when the pendulum swings in the wrong direction, but proactively, before anything happens. The report stated that “More than half of the surveyed companies say they plan to address reputation risk by investing in technology such as analytical and brand monitoring tools.” This underscores the importance of online reputation management for business.
Among the most interesting statistics from the study, 87% of the executives rate reputation risk as more important or much more important than other strategic risks their companies are facing and 88% say their companies are explicitly focusing on managing reputation risk.
The top drivers of “reputation risk” were the following:
- Ethics/Integrity (fraud, bribery, corruption)
- Product/Services (product safety or services issue, health/environmental, controversial products)
- Security (physical and/or cyber)
- Financial (reporting/ accounting issue, credit rating)