Managing reputational risk should be one concern of business leaders as they grow their companies.

Reputational risk relates to the potential loss that can result from damage to a firm's image or repute

Take it from me, that if a company loses its goodwill in the market, there is every tendency that it would lose its customer base as well.

This is because corporate reputation is the perception of a firm in the minds of its stakeholders. No wonder, reputation is often referred to as a company’s most valuable asset.

A strong, positive reputation can add more value to brand equity, brand integrity, sustained earnings, and future growth. This implies that reputation is at the heart of everything your organization does and especially must be protected when faced with a crisis.

Take note, that the impact of reputational damage can be minor at first; however if amplified by external social processes especially the media and legal systems, can lead to severe damage to the firm.

The severity of reputational risk is centred on the fact that “It takes many good deeds to build a good reputation, and only one bad one to lose it   ……..Benjamin Franklin……….

On a more critical note, “A reputation once broken may possibly be repaired, but the world will always keep their eyes on the spot where the crack was” ……. Joseph hall……..

Ethics violations, safety issues, security issues, lack of sustainability, poor quality, and lack of or unethical innovation among others are adverse events typically associated with reputational risk

Managing reputational risk

The essential first step to managing reputation strategically is building an accurate picture of your strengths and weaknesses

1. Identify reputational risk early

Risk sensing should be entrenched into an organization’s risk governance structure, to allow such organizations to continually identify emerging threats. To spot potential risks, many leading companies perform constant monitoring of traditional and social media outlets as well as internal data sources.

This can require a human- and technology-enabled capability that allows companies to analyse and interpret data to inform business decisions. Monitoring teams can support daily reputational threat sensing as well as the organization’s crisis management response process.

2. Make earlier provision for future reputational crisis

By making provisions that can take care of unforeseen future occurrences and trends and anticipating potential long-term reputational risk impact, firms can be better prepared. This approach recognizes reputational risk as a significant strategic consideration. Facing future risks may require major internal changes. These changes may be best made as part of a well-managed plan rather than a thoughtless response to a reputation-damaging event.

3. Establish a risk governance structure

Managing reputational risk doesn’t typically fit neatly into a single function. Reputational risk management may require clear accountability, leadership, and engagement across numerous teams. These teams may include marketing, risk, internal and external communications, human resources, and operations.

Companies can benefit from recognizing the critical role of identifying cross-functional leadership across all business units that interact with key stakeholders

4. Formalize a crisis response program and practice

Establishing an effective crisis management framework can allow organizations to integrate the right processes, roles, and governance into existing contingency plans.

Knowing when to mobilize a crisis response, how to manage decision-making, what information to communicate to which stakeholders, and how to coordinate communications across different teams takes practice.

Companies can test processes and gain experience by running crisis simulation rehearsals based on the most critical reputational risks.

5. Collaborate with stakeholders

For example, competitors could attack a brand’s reputation by writing negative online reviews, and analysts who are stakeholders in the firm could influence the process by responding against the attack through media commentary even before the senior leaders could know about it.

Understanding the role and importance of stakeholders can be important for managing reputational risk. Many organizations have a diverse set of stakeholders-employees, business partners, investors, analysts, regulators, and the general public.

The firm could benefit from considering internal and external stakeholder perspectives to identify the impact of potential reputational risks.

6. Execute the plan

Reputation-damaging events often start as issues that grow into major crises as information emerges and the implications become clear. This sequence can unfold very quickly, and very visibly.

During a crisis, there are commonly two parallel priorities—containing and resolving the issue at hand and addressing short- and long-term reputational risk. Both can require swift decision-making, responsive communications through multiple channels, and a consistent narrative that addresses the issues most important to various stakeholders.

Takeaway

Be Transparent to customers and the entire public. It is often important to build and sustain trust. Companies should build reputations that are sustainable by truth and acceptance of errors and mistakes whenever they occur. Also, it’s imperative to evidence the company’s ability to turn failures into successes.

How Gabriel Domale Consulting creates value for clients

Gabriel Domale Consulting leverages our deep hands-on industry experience to provide consulting services including strategy, corporate governance, transformation, due diligence, cost reduction strategy, training, financial modelling, valuation, fundraising, business model innovation, value for money audit, data analysis, estimation, performance monitoring and reporting.

Read more: https://www.www.gabrieldomale.com/blog/how-to-make-companies-in-africa-to-grow-by-consulting

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Author

Dr Leesi Gborogbosi

CEO, Gabriel Domale Consulting – Dr Leesi Gborogbosi

Dr Leesi Gborogbosi is the CEO of Gabriel Domale Consulting, a management consulting firm based in Nigeria, that helps companies in Africa to grow, provides insights to leaders and transforms institutions.

He has about three decades of leadership experience in the oil and gas industry (Shell Nigeria). He is an expert in finance, strategy, corporate governance, transformation, cost management, leadership development and due diligence.

Dr Leesi Gborogbosi was Project Finance Manager of Upstream Oil & Gas Projects (7 projects - Headline size: $8 bln) - Southern Swamp Associated Gas System, Forcados Yokri Integrated Project, Otumara, Adibawa, Agbada and Assa North/Ohaji South Projects.

He provided advisory services namely, strategic planning, budget management, funding strategy, risk management, governance, due diligence and investment plan covering the full life cycle of the seven major upstream oil/gas projects, power facilities and export pipelines.

He collaboratively works with business leaders and their organizations to identify growth opportunities and create value through operational excellence in strategy implementation and capital efficiency by delivering projects within costs, building strategy and planning frameworks and crafting of innovative funding solutions.

Dr Leesi Gborogbosi provides support to finance leaders to make crucial decisions and optimize performance through financial excellence in finance systems and accounting operations, budgeting, finance transformation, cost reduction, governance, risk, and compliance.

He has doctoral degrees in strategy and business studies and MSc (Research Methodology in Management) from IE Business School, Madrid and an MBA (Finance and Banking) from the University of Port Harcourt, Nigeria; and BSc (Accountancy) from the University of Nigeria, Nsukka. He had his secondary education at Federal Government College, Jos, Nigeria.

His doctoral dissertation focuses on strategy implementation, collaboration, the role of middle managers, and the dynamics of social movements (host communities).

Dr Leesi Gborogbosi leverages his professional experience as a Certified Management Consultant (CMC); Fellow, Institute of Chartered Accountants of Nigeria; and The Institute of Management Consultants. He is member of the Chartered Institute of Procurement & Supply, London; Nigerian Institute of Management (Chartered); and Strategic Management Society, Chicago, United States.

He was nominated by the Strategic Management Society, Chicago for "Best International Conference Paper Prize Awards" in 2017 and 2015. He was appointed the Chair for the Session on “Leading change implementation processes” at the Strategic Management Society conference in Denver, United States in 2015.

Dr Leesi was a member of the Strategic Management Society “Special Committee on Diversity and Inclusion”, Chicago, USA, with the responsibility of providing the Strategic Management Society Board of Directors with a good audit of where the Strategic Management Society stands with respect to inclusiveness in its activities.