A strong reputation has the potential to be your largest asset, but just one crisis could irrevocably tarnish your image and ruin your business. According to a recent survey from Deloitte, the largest professional services network in the world, 87 per cent of business executives believe that reputation is their largest risk area, and only 19 per cent of respondents think their business is adequately protected. In order to be prepared, you need to identify and mitigate the potentially devastating risks to your business’s reputation.
Health and safety incidents, product recalls and regulatory investigations are just a few of the incidents that have the potential to damage your reputation; and, now that social media and other online sources have accelerated news coverage, you may only have minutes to respond to a crisis and protect your image. The failure to quickly and effectively address a crisis can result in lost business, litigation, regulatory fines and more.
The Many Forms of Reputational Risk
The damage to a business’s reputation is often the result of other risks. For example, a cyber attack that disrupts your business operations is generally not considered a risk to your reputation. However, an extended disruption could cause customers to think less of your business and its products.
Here is a partial list of risks and events that can cause damage to your reputation:
The Role of Social Media
Social media can be a powerful tool to connect with customers and extend the reach of your business, but it can also be used to quickly spread negative publicity that can severely harm your reputation.
In an increasingly connected world where anyone with a smartphone can act as a journalist, any negative experience a consumer has with your business has the potential to go viral and be seen by thousands—even millions—of people. Make sure that your business has a social media presence that is constantly monitored, and that it quickly responds to any criticism or negative customer experiences in order to maintain your reputation.
Online review services can also damage your reputation and result in lost business. According to Dimensional Research, a United States-based organization that provides market research to technology companies to help them make smarter business decisions, 90 per cent of customers check online reviews before buying products, and 80 per cent make decisions based on what they read. Clearly, the best way to ensure that reviews for your products and services are positive is to maintain effective and comprehensive quality control procedures. However, it’s important to regularly check online sources to get feedback on your products, and to identify malicious or fictitious information that could reflect poorly on your image.
Strategies to Lower Reputational Risks
There is no such thing as complete protection from the risks to your reputation, but there are strategies you can use to limit exposure and respond to a potential crisis:
In the event of a crisis, it’s important to respond quickly and decisively:
Limit Your Risks
It’s inevitable that every business will experience some form of reputational damage, but there are ways to limit your exposures and to cover losses. Contact Lloyd Sadd Insurance Brokers Ltd today to identify your unique risks and protect your business.