Strategy

How Does Reputational
Risk Affect You?

Starting-up a start-up from the eyes of starter-uppers.

Picture of Todd O'Keefe

Todd O'Keefe

Chief Content Officer

Table of Contents

What impacts reputation?

The impacts of reputational risk run deeper than you might think.

Imagine that your new suitcase handle breaks the day you buy it or your new hair stylist cuts your hair way shorter than expected. 

What would you do?

The smart bet is on returning the suitcase for an exchange or a refund and never stepping foot in that salon again.

On the other hand, how would you handle your bank getting hacked and all of your confidential information getting leaked? 

It definitely ups the stakes more.

Even if it was a simple mistake in your account, you’d likely feel more intense feelings of fear and uncertainty about whether you could ever trust them again.

Perception, emotions and distrust directly impact reputation.

And the ability to debate or collaborate is sorely lacking when distrust is the default. 

Societal fears are rising and becoming more acute as evidenced by a lack of faith in our institutions to provide solutions or societal leadership.

Impacts and implications

How has your company handled the good and the not-so-good times in the past?

Have you responded with transparency and responsibility for your actions?

Customers will often overlook a broken suitcase handle or even an overbooked flight if they were treated well in the remediation process.

Reputations are also impacted by forces outside the company such as social capital.

In Deloitte’s global survey on reputation risk, it found that 25 per cent of a company’s market value is attributed to its reputation.

A brand with a negative online reputation might find itself the target of bullying by frustrated customers demanding change.

Similarly, a company with positive online followership where customers set up fan clubs and promote the company will see their reputation and credibility enhanced.

Smart brands understand that its customers are its most important stakeholders for managing reputation risk.

Power in numbers

Social capital might be the new measure for customer engagement and reputation. 

There’s also environmental ranking. 

How are you ranked within your industry?

Are you seen as a leader or are you an unknown?

Environmental ranking can positively impact your reputation. 

Consider this: let’s say your brand extension is under a larger, more well-established umbrella brand with a very high environmental ranking. 

As a new brand, you can leverage its reputational assets to your advantage while building trust as your own brand. 

Adversely, if the larger umbrella brand is seen as weak in the industry, it could be hard to claim a strong relationship and reputation with customers.

Not unless you refresh all branding and marketing to position it as a new and separate entity. 

Reputation management specialists have to plan for everything from a mundane tax audit to cyber hacking of sensitive client information.

Proactively protecting your brand image means considering the impact of endorsements, evangelism, online reviews and customer experiences. 

All impact how our reputation is solidified in the minds of our customers and potential customers. 

Planning for the worst-of-the-worst case scenarios positions you to be proactive to respond and react.

And provides a by-product of practicing the skills and communication needed in mitigating a crisis should a reputation risk become a reality.

Looking for more ways to navigate reputational risk management?

Grab your playbook for insights into why reputation is important and how to predict, prepare and prevent risks to your brand.

Gain more confidence when handling brand crises and fixing risk plan vulnerabilities.

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