“As individuals, our reputations represent our ability to operate freely in the world, to broker deals, to make promises, to demand that promises made to us are honoured. Reputation is the personal currency with which we all trade. The same is true on a much larger scale, for corporations. A company that loses its good name, if only for a short time, suffers damages, sometimes irreparable damages, to its market capitalisation and shareholder value, and it its ability to regain its competitive position in the business community,” says Huntley.
Prevention is better than cure. That goes without saying. But it is the first thing that a public relations executive will say when quizzed about how to recover from a damaging mistake. And if the number of corporate disaster, is anything to go by, then a lot of senior managers have never talked to a PR executive, let alone had any media training.
“As with any aspect of risk, prevention is better than cure. So it is more important to prepare for potential risk,” says Ron Finlay joint managing director of PR agency Fishburn Hedges. “Risk managers and communications managers should work together in crisis management. We will carry out a risk audit to identify perils that cause reputational damage, their probability and impact on a scale of one to five. This helps us to prioritise and prepare contingency plans.”
How to deal with the media? Taken from June edition of Enterprise Risk
Special Focus – Reputations
Richard Branson recently told the Institute of Directors, “your reputation is the most important thing in business”. Sean Jackson asks how to manage the most personal risk of all when things go wrong and how to make sure shareholders and the general public hear about the things you do right?
Whether or not Virgin’s Branson is right or wrong about reputation being the most important thing in business is up for debate. Whether or not Branson sometimes gets the boundaries blurred between image and reputation is also highly questionable. What cannot be argued though is that his manipulation of the media and aggressive protection of the Virgin brand have made his company and his name one of the most highly regarded on the market. But, just one public blunder could raze his empire to the ground.
There are countless examples of corporations’ reputations being dragged through the mud with the chain of events that can lead to reputational damage being as varied as the methods used to deal with them. Some foul-ups are easily avoidable and some are quite simply irretrievable. But with the right crisis management some catastrophies can actually be turned around to reflect favourably on the management and subsequently on a company’s market valuation.
“Corporate reputation is often the first casualty in a business crisis,” says Philip Huntley, a senior crisis and security consultant with Aon Giuliani Protocol, a crisis and reputation management services consultancy. Taking control in perilous moments will be remembered as true leadership. We also know that failing to take responsibility is permanently damaging.