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ASU Lodestar Center Blog

The New Normal: Reputational Risks are Bigger than Ever

There’s a saying that often refers to personal relationships: Trust takes years to build, seconds to break, and forever to repair.

But think it over for a bit, and you’ll soon see that it’s quite applicable to management, too. It takes time for an organization to build a good reputation, but it takes only one publicized issue to ruin it.

The issue in question doesn’t even have to be true. The public’s perception of the brand value of an organization (whether it’s for-profit or nonprofit) is easily affected once talk starts to spread. In this day and age of social media, news — especially the bad kind — spreads fast, and no one is exempt.

However, according to a poll conducted by Deloitte (one of the Big Four professional services firm in the world) during a webcast, only 24 percent of the participants belonged to organizations that had formal ways to measure and assess brand value. Worse, fewer than 22 percent believed that their respective organizations would become the subject of negative publicity on social media. The problem with this outlook is that it leaves organizations ill-prepared to handle large-scale PR problems.

Before, dissatisfied clients would complain to their family and friends about their bad experiences, and it usually ended there. Nowadays, dissatisfied clients often go online and let the whole world know exactly how they feel about an organization that served them. In a matter of hours, a personal story can spread like wildfire, and when it does, various media outlets will be eager to pick it up.

It’s a nightmare situation, and it can happen so easily. Thus, organizations should identify, assess, and prepare for reputational risks much more diligently than ever before. Taking an offensive stance is not enough — being on the defensive is just as important.

But the big challenge organizations face with reputational risks is the difficulty that comes along with measuring them effectively. According to a survey conducted by property and casualty insurance firm Ace Group across 15 countries in EMEA (Europe, the Middle East and Africa European Medicines Agency), 77 percent of organizations have a hard time quantifying the effects of reputational risks, 68 percent feel that there isn’t enough information on reputational risks to guide them, 66 percent think they don’t have enough insurance protection for reputational risks, and 56 percent believe that social media made their companies more vulnerable and prone to reputational risks. Where does your own organization stand?

Reputational risks are trickier to handle than tangible risks, but you can prepare your organization for unexpected backlash by implementing a clear plan that aims to not just manage crisis after it happens, but to also minimize the chances of it happening in the first place. To get this done, everyone in high leadership positions needs to get involved with PR specialists in identifying areas where reputational risks are high and likely to occur.

Another thing that can help is evaluating your organization’s existing risk management plan. Is it focused too inwardly? When an organization is too busy managing risks that can happen within, it tends to forget about outside risks, including risks that the public can see.

Thus, leaders should have a wider perspective on risk management. Having a traditional program to manage tangible risks is still crucial, but your organization should also consider newer and bigger risks brought about fast-changing technology.


Alexandrea Roman

Social Media Specialist and Copywriter for Azeus Convene

Alexandrea writes for Convene, a paperless enterprise and board meeting solution that supports iPad, Android, Windows, Mac and the Web. You can read more of her articles on LinkedIn.


ASU Lodestar Center Blog