Reducing Reputational Risk…

Michael D. Moberly      July 20, 2009

Company reputation, along with image and goodwill, are intangible assets!  An effective initial step toward reducing the probability that a company will be unduly exposed to or become a victim of ‘reputation risks’ that occur with increasing frequency and adversely affect, not only image and goodwill, but value and revenue as well, is to conduct an intangible asset assessment.  A well designed and executed assessment will produce three relevant and beneficial outcomes for a company, (1.) identify its key intangible assets, (2.) assess reputational risks to those assets, and (3.) determine strategies to prevent and/or mitigate those risks. 

The following are the much abbreviated findings of an actual intangible asset assessment for a U.S. headquartered company.  This company is the market leader (developer, manufacturer, and supplier) of a particular automotive services product and has multiple U.S. and international manufacturing, sales, training, and distribution sites with annual sales exceeding $300 million.

The assessment revealed four key areas which, in the assessor’s view, warranted attention by the company’s management team and board:

1. A presumptive (over) reliance on patents as constituting the sole means for safeguarding the company’s rights to it’s reputational – proprietary know how…

2. An under-appreciation for the intertwined relationship between the company’s reputation (image, goodwill, brand/product integrity, etc.), relative to the (reputational) know how embedded in employees at various levels and global locations…

3.  Company practices (polices, procedures, etc.) were largely absent (a.) acknowledgement of intangible assets, and (b.) understanding of the assets relationship to sustaining/building company reputation…

4.  The absence of a protective company culture that contributes to ensuring key reputational drivers are sustained, in this instance, (a.) a web-based customer/client training and trouble-shooting programs, and (b.) rapid turn-around (response) times for customer inquires, services, trouble-shooting, product delivery, and repair…

The reason the assessor identified these four areas as warranting management team and board attention are the convergence of (a.) the assets’ vulnerability, stability, and fragility, and (2.) the rapid cascading affects that adversely affect reputation, image, goodwill, value, and revenue should certain risks (to  those assets) materialize.


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