With two to three Twitter accounts activated every second, 50 million tweets per day (252,000 tweets per day in the MENA region alone), 350 million Facebook users active daily (over 28 million users in MENA region) and over 80% of all companies using either channel… the world is now more connected than ever and in turn, companies are now more vulnerable than ever.
As a result, the realm of reputational risk is now regarded as a ‘meta risk’ for companies, standing at the forefront of any key strategic and operational concern for global and Middle Eastern senior executives. Reputational risk has now become a potential threat on a par with new competition, technology failures, talent issues and changing regulations.
But the concept has shifted from ‘controlling’ risk’ to the notion of ‘Risk Intelligence’. What this means is that corporations must ask themselves which reputational risks they can potentially accept, which will pose the greatest potential impact and if they are prepared to address these reputational risks if and when they arise.
So how do companies become ‘Risk Intelligent’? First, they take a journey of self-discovery, then they analyze stakeholder and marketplace threats and opportunities and lastly, they proactively manage actions designed to protect and enhance reputation and derive value.
Here are the three steps:
Step One: Internal Discovery
Internal discovery is when an organization examines its strategies, initiatives, potential risks and operations, to ultimately locate risks to reputation. Each department within the firm must assess potential risks and how they will impact the business if they arise.
Step Two: External Identification
External Identification is the process of gathering information from stakeholders to assess potential reputational risks from an outsider’s viewpoint. Gaps between the corporation’s desired reputation and where it currently stands should be identified. This can be conducted through surveys or external consultants to derive unbiased useful information. With this information, potential room for improvement can be acknowledged and built upon.
Once the first two steps are thoroughly conducted (and they must be repeated frequently, as new updates always surface), a plan of action for each possible reputational risk must be put in place.
Step Three: Continuous & Consistent Monitoring
And when the groundwork has been laid, with potential reputational risks identified, continuous monitoring of the overall surrounding environment is vital. Informal surveys conducted amongst stakeholders, along with diligent media monitoring, will aid a corporation in identifying potential risks to reputation.
Reputational risk has gained its ‘red flag’ ranking in most boardrooms across the globe. Senior executives now comprehend the meta risk involved in reputational damage. As such, risk departments and Chief Risk Officers have been appointed within the firm to intelligently manage potential risks. In addition, it is crucial that each employee is aware of his or her role within the institution, as a powerful brand ambassador.