NEW YORK: The top strategic risk for large companies is reputational damage, and successfully managing that issue takes more than merely having a crisis plan handy when something goes wrong, according to a global study released this week by Deloitte.
Social media in particular has transformed reputation management, and nearly 50% of surveyed executives listed this as the biggest technology disrupter and threat to their business model, outranking other technologies such as analytics, mobile applications, and cyberattacks.
“Today, new technologies and social media mean that a company's reputation lies in the hands of the public more than ever before – and severe reputational damage can be done in an instant,” said Andy Weitz, president and CEO for the US at Hill+Knowlton Strategies, which worked with Deloitte on the survey.
The social element of any organization is a very complex animal, the study noted. Therefore, it is imperative that a company stays on top of what is being said about not only its own activities, but also the entire industry and competitors. A company should be aware of what consumers, stakeholders, advocacy groups, and the public at large think, according to the report.
Although many stakeholders consider a company's reputation or brand to be its most important risk, and therefore its greatest asset, priorities are often displaced, said Henry Ristuccia, the study's author and Deloitte's global leader on risk and compliance.
While two-thirds of companies surveyed stated that their CEO, board, or board risk committee has oversight when it comes to managing strategic risk, a common error Ristuccia noticed is PR and communications teams being used only after an adverse event has occurred.
“It is not just about what happens after an event in the risk space; it is about how you help organizations create those listening posts and mechanisms to think about what is knowable beforehand,” said Ristuccia.
Because of how quickly a company's reputation can go from sweet to sour, the study's author recommended putting mechanisms in place to manage and monitor the brand and halt potential issues before they happen. The broadening availability of analytics and data-science programs can help companies do this, but organizations should also be cognizant of other opportunities to strategically handle risks and uphold their reputation.
“I would suggest PR organizations should be very focused on what the opportunities are in big data, in sensing and social info, and figuring out how to develop programs that help senior stakeholders manage that brand in this digital world we live in,” said Ristuccia.
Leading companies are also dedicating time to identify their character, and then using this as a basis for communicating consistently and effectively across channels and scenarios, according to Weitz.
“For PR and communications firms, helping companies to understand and define their character will be an increasingly critical function,” he said.
Deloitte surveyed 300 C-suite executives at large companies around the world for the study.