Reputation Insurance, why it makes good sense
Like any asset, there are hundreds of unforeseen risks that are associated with online reputation. A common viewpoint shared by many business executives is that they don’t know how to gauge how virtually explosive different aspects of their business model are. If you don’t know what smoke is, you probably can’t justify cost of fire insurance.
The cost and risk are real.
(Let us use a little example below)
As the size of a business increases, an exponential multiplier of risk is applied to the digital model:
- more consumers increase opinionated reviews
- more employees increase HR related violations
- more marketplace share increases chance of competitive arson
- exposure to social networks increases chance of
- confidential leaks and privacy disclosure (family, friends, bedroom talk.)
- ethical misbehavior (executive compensation, regulation violations)
- employee / x-employee complaints (unions, disgruntled employees)
Keep in mind these risks are only risks. They are not guaranteed occurrences, merely quantifiable and avoidable impacts to the business.
If we compare professional reputation to the idea of a business burning down, a smart owner doesn’t remodel the entire location or spend the entire budget on high-risk insurance policies during a crisis. Educated decision makers update the property to reduce the chance of fire and minimize damage if a it does occur.
Some example actions they might take:
- Trim the hedges back from the building.
- Establish clear emergency routes for staff.
- Work on fire-drills for quick and decisive actions.
- Train team members to take care of dangerous situations.
- Create back-up plans for mission critical business functions.
- Memorize the 911 number to immediately contact the experts.
The totally honest truth:
there is no 911 number for your digital business model.
The closest thing you can have in an emergency is an experienced team who has taken the time to build, manage and protect the unique aspects of your business assets.
The Institute for Crisis Management reports that 65 percent of the crises companies face are of the “smoldering” variety. The companies are aware of problems that could erupt, but they avoid taking necessary actions to prevent a flash fire and the risk-cost is often associated with management neglect. The only 35% of crises are “sudden” and while painful, could have been minimized through proper planning. Example situations that can cause smoldering crises are lay-offs, consumer recalls, customer service, executive misconduct, and stock performance.
What can an expert team do for your reputation?
- prepare for probable high-risk scenarios
- establish priority matrix for cost vs. risk scenarios
- take long-term, cost-effective strategies instead of high-cost tactics
- educate stakeholders, leveraging internal and external support mechanisms
Pro-active strategies allow for tactical campaigns to be launched without costly delay:
- create strategy around competitor’s risk and opportunity matrix
- minimize loss when company or executive brands are under attack
- safeguard high-priority revenue channels, limiting casualties to niche channels instead of entire markets
- address libelous and opinionated rumors before they contaminate marketplace
The end conclusion: you shouldn’t rely on a fire-fighter only when you see flames. There are multiple points a pro-active expert can use to safe-guard your assets and build a stronger business.
Just as with any crisis, reputation management in the digital world needs to have a plan in place with the proper assets allocated to support it. Without a plan, critical time delay creates a recipe for disaster.
Can you think of some additional actions that make sense to prevent a digital flash fire?