Company Reputational Risks: Identify, Prioritize, Monitor, and Manage!

Michael D. Moberly   September 1, 2009

Company reputation is an intangible asset that, so long as it remains unblemished and unchallenged, delivers value, sustainability, and competitive advantages to a company.  The stewardship, oversight, and management (guardianship) of a company’s reputation, as more company’s are recognizing, is an integral function/responsibility of the management team. 

What is (company) reputation?  Fundamentally, it’s the opinion of the public and a company’s stakeholders toward a company.   A tenent of company reputation, as noted by Jeffrey Resnick of Opinion Research Corporation, is that reputation cannot be (a.) manufactured by an advertising agency, or (b.) created by a public relations firm.  Company reputation, Resnick says, is built (enhanced) as a result of ongoing interactions between a company and its key stakeholder groups, where the experience of the latter is consistent with the (a.)  values the company claims to uphold, and (b.) promises it makes (through advertising and other forms of marketing communication).  Ultimately, company reputation is as much about perception of the behaviors (of the company as a whole and/or its management team) as it is about about fact(s). 

What are the fundamental responsibilities of those charged with the stewardship, oversight, and management of company reputational risks?  

– The first responsibility is recognizing that a company’s reputation (a.) is a valuable intangible asset, that (b.) warrants multiple strategies (plans) to mitigate and/or prevent reputational risks from materializing, which (c.) can deliver returns-on-investment commensurate to the value of the reputation.  

– The second responsibility is (a.) knowing and anticipating, (b.) prioritizing, (c.) consistently monitoring, and (d.) timely recognition and response to a full array of risks (sources, origins, motives, misteps, miscues, etc.) that can adversely affect a company’s reputation. 

When these fundamentals are left unchecked, real enterprise-wide distress can, and unfortunately, with increasing frequency and speed, materialize to adversely impact reputation.  Unlike many other business risks though, reputational risk can be prompted, influenced and instantaneously transmitted by an ever expanding array of stakeholders, interest groups, mediums, and channels, most all of which operate globally and on a 24/7 basis.

Unfortunately, some companies and management teams approach (perceive) reputational risk mitigation as merely as a public relations exercise.  A more prudent (business sustainability) strategy would be to recognize reputational risk mitigation is both an opportunity and a fiduciary reponsibility to (a.) sustain control and value of a company’s reputation, and (b.) align a company’s internal processes and culture with its public behavior and customer/stakeholder experience.   Otherwise, it’s increasingly unlikely a company’s reputation can be effectively leveraged to enhance company value, develop stronger competitive advantages, or achieve greater sustainability!

 

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