ANALYSIS: Reputation Risk Handbook

“I’m as pure as the driven slush” quipped the much-quoted actress and libertine Tallulah Bankhead.

Not only did she mean it, but other sharp comments built her reputation as one of the wits of Manhattan. She worked hard to polish and refine it.

MAE WEST2

A new and useful handbook on reputation and the risks that can go with it, starts engagingly by referring to another showbiz icon, Mae West.

Like Bankhead, West built a profitable reputation for being bad. Today’s equivalent might be Russell Brand. For all three, Bankhead, West and Brand, nothing could be more damaging than being thought respectable or “good.”

Yet when it comes to a company, having a name for being bad can seriously damage its health. This handbook explains both how to protect and then enhance company reputation.

Nowadays an entire business sector may find itself struggling to cope with reputational damage. Once it happens, making amends can prove costly, long term and ultimately transformational.

“An industry that is meant to serve the wider economy is regarded as greedy, irresponsible and even criminal.”
FT leader on the banking industry: 18th Nov 2014

There is a particular risk these days from what the author calls a world of hyper-transparency. That is, an era where there is “nowhere to run and nowhere to hide.” Where once perhaps a firm or a profession could take little notice of the risks that might threaten their reputation, today it is almost impossible to conceal irresponsible behaviour for long.

The implications of extreme transparency can no longer be ignored or minimised. For example, where once the HR profession took little interest in issues to do with reputation, now it is unavoidable. [1]

Early on, the booklet asks whether a reputation hit today means long term damage, or whether most are short-term blips.

For instance, will GM be permanently affected by the saga of the faulty starter motor? Will Tesco sustain a long-term hit for its misreporting of profits? What difference will the hacking scandal really make to News Corp? Will GS4 and Servco eventually return to respectability? As for the banks, is their now dreadful reputation merely a passing phase?

The handbook identifies three main results from a reputational hit: a deadly blow—eg Enron or News of the World; A recoverable hit—eg Siemens, BP; and thirdly the chance to enhance reputation, as when Johnson and Johnson, withdrew all its stock of Tylenol to much public acclaim.

reputation balloonReputation is Strategic

An important message from this handbook is: treat reputation as a strategic issue, not a minor matter for concern by risk specialists.

“There is growing quantitative and qualitative evidence that smart reputation risk management can add value to the bottom line…”

In considering reputational risk therefore, what sort of dangers are we talking about? The Guide suggests four basic ones to watch out for:

Natural risks; such as climate or seismic events; Leadership risks where senior managers make mistakes; Operational risks arising from the production process; and Environmental risks.

While not all risks prove to be strategic, reputation risk certainly is, and does not occur in a vacuum. It happens in conjunction with other risks.

Many stakeholders

The Guide draws attention to the many stakeholders with an interest in maintaining reputation.

The board though is the ultimate protector or guardian of an organisation’s risk and the guide suggest four areas of focus for them: accountability, inclusiveness, cross functionality, and preparation.

toolkitThe Toolkit

Since reputation differs from other risks, this Guide offers a special  “toolkit” of some 15 actions which can be part of a well-developed risk management strategy.

These are all described, along with key questions leaders can ask about each one so they can steer the company in the right direction.

The publication

The author is a highly experienced practitioner and frankly deserves better from a publisher.

In an era in which readers expect high quality graphics, attractive fonts and thought through layouts and presentations, this hard copy handbook is poorly designed.

We get compressed print as if space is at a premium, unimaginative layouts, and badly reproduced graphics that in places prove almost unreadable—rather the opposite of the hyper transparency to which the author refers!

conclusion (1)

 

 

 

For those at the sharp end of reputation management in organisations this new Handbook is rather stronger on models, typologies, definitions and questions, than on clear routes to action.

However, there is much useful thinking and clarification about risk and reputation which many will find both helpful and stimulating.

reputation handbook

  1. See for example “No place to hide: HR and the new ethical agenda, www.ethical-leadership.co.uk

Dr Andrea Bonime-Blanc is chief executive of GEC Risk Advisory

Published by Dō Sustainability, as an ebook, a pdf and paperback

Exclusive Interview
Andrew talks to author Andrea Bonime-Blanc about her new handbook.

 

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