Reputational risks – management, minimization, protection

Business is impossible without competition. That is why the reputation of a company is so important. Since it can either attract new customers even in difficult times, or finally put an end to this brand. How to track reputational risks correctly? And, most importantly, how to minimize them if necessary? S&P Agency experts will tell you about it.

In an era of such a strong development of digital technologies and the enormous popularity of social networks, reputation has become more vulnerable than ever. Any information scatters instantly, it is difficult to control the content, and therefore any, even a slight impact, can affect the reputation.

If the reputation of one or another company is shaken, then this will instantly lead to a decrease in income levels, the main goals of the business will not be fulfilled, share prices will fall, and all this will make the risk of bankruptcy more than real.

What are reputational risks

Reputational risk – it is a danger that hangs over the good name or reputation of a business or organization. Reputational risk can arise in the following ways:

  • Directly as a result of the actions of the company itself
  • Indirectly, as a result of the actions of an employee or employees
  • Regarding other peripheral parties such as joint venture partners or suppliers

Main types of reputational risks

There are two such varieties:

  1. External. They are outside the company itself

Such risks include black PR from competitors, illegal actions of partners, indecent behavior may be actions on the part of partners that caused dissatisfaction with the audience, black PR from competitors, and even the behavior of influencers and more. That is, everything that the company is not able to control.

  1. Internal. It is about the actions of the company’s employees

What can lead to internal risks?

  1. Managers and employees

If people with a negative reputation are at the head of the company, then one way or another it will spread to the entire company. The reputation of an enterprise and its management are inseparable. The consequences of this — loss of income, customers and investors.

45% of people perceive the image of top managers and the image of the company as one

25% of the company’s value is the result of reputation alone

The problem is that even if the scandalous leader retires, it will not be so easy to fix the situation. All the same, public explanations and apologies will be needed. And even if the company begins to actively work to restore its former reputation, it may take many years in the end.

Reputational risks - management, minimization, protection

But not only the management of the company can influence the reputation of the brand, but in fact each of the employees. It is enough just to write unverified or thoughtless information on social networks. It only takes one phrase, which can be misinterpreted, to start this whole process.

  1. Negative content

On the web, content may appear that will show the company in a negative light. It can be articles in the media, customer testimonials and more. If there is a lot of such material, then the level of trust in the company will noticeably decrease.

If a company is involved in some events that cast a shadow on its reputation, then this will attract maximum interest from the press. And in this situation it is necessary to act immediately. Otherwise, new facts will be constantly added to the available information, which in most cases will not even correspond to reality. That is why it is so important to start as soon as possible to apologize, refute unconfirmed data and order positive texts in special reputational agencies .

  1. Social networks

Now the main struggle of the company for customers and for a positive image takes place in social networks. Any interesting brand has thousands of followers. People follow all the news related to him. Therefore, any negative moments spread in an instant.

Suffice it to recall the Nestle company, which in 2010 was simply attacked by angry Facebook users. Every day they posted a video on the wall of Nestle, which described the harm from using palm oil. All their actions had corresponding consequences for the company.

  1. Loss of personal data

A good security system should be installed on the website of every self-respecting company. Moreover, it must be updated regularly. Otherwise, the simplest hacker attack will lead to the loss of trust of partners and customers.

An example of this — Accelion, a software development company. Its website was hacked, due to which some information owned by the company was made public. It was an extremely embarrassing moment.

  1. Cost and quality of services

Sometimes employees, after their dismissal, in retaliation, disclose information about the company that relates to the financial aspects of its activities. Often this information can have an extremely negative impact on the company’s reputation. For example, if in recent years her business has not been very successful, then this fact is unlikely to help attract new investors.

  1. External Business Change

Any changes of an external nature may adversely affect the company’s activities. For example, a change in administration has a direct impact on the success of doing business.

If the reputation of the brand has been damaged, then this is fraught with many negative consequences — income is declining, it is becoming more and more difficult to hire valuable personnel. Therefore, no matter how difficult it is to minimize reputational risks, it is even more difficult to work on restoring a damaged image.

Reputational risks - management, minimization, protection

Peculiarities of reputational risk management

  • It is important to know exactly what your stakeholders expect from you
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If you know exactly what your customers want, it will be much easier for you to give them what they want. But do not rush to promise them what you are not able to give.

After all, this will only bring you harm. Never underestimate a dissatisfied user.

  • Brand reputation needs to be measured

To date, various reputation metrics have been created. With their help, you can determine the level of user confidence in your company, as well as how recognizable it is in the media space.

  • Stay positive communication

Reputation should be carefully worked on. After all, absolutely everything that enters the information environment has a direct impact on the reputation. It doesn’t matter if it’s positive or negative. And since there is no way to completely protect yourself from the negative, you need to actively work on building up the positive.

If positive changes are taking place in your company, immediately let all your employees, partners and customers know about it. Whatever incident occurs within the company or in its close environment, be sure to show your reaction to what happened. If you’ve done something wrong, admit it. Respond readily to both positive and negative comments.

  • Be aware of rehearsal risks when developing your strategy

Analyze all the weak points of your company. Determine what exactly in its activities can be considered a weak point. Come up with the most likely scenarios where the public perception of your brand could deteriorate.

Think over the main markers that would signal the need for certain measures. For example, if customers complain about the cleanliness in boiler rooms, then this means that you need to seriously improve the quality of service.

  • Consider how you will respond

If things go according to a negative and undesirable scenario, you need to respond quickly, promptly and, most importantly, thoughtfully. Therefore, it is important to plan in advance how you will act in various crisis situations.

Reputational risks - management, minimization, protection

A good reputation is the key to success!

It is a fairly well-known fact that a positive image of a company leads to an improvement in the demand for its products or services. And the decline in business reputation, on the contrary, slowly but surely leads the company to collapse and bankruptcy.


The profit of your company directly depends on reputational risks. The reason for such risks may be dissatisfied customers, dishonest competitors and even employees. Therefore, you should always be on the alert and monitor the information field in order to identify the threat in time.

It is important to assess possible reputational risks in time. And after that, it is already possible to approach the preparation of a strategy aimed at eliminating them. This may be a rebuttal in the press, work with dissatisfied customers and much more. The strategy you have worked out should be flexible so that it can be changed and adapted to this or that situation.

Well, if you want to have a guaranteed strong reputation, you better use the services of a reputation agency. Its experts will analyze your rehearsal background and give you the necessary recommendations to strengthen your brand image.

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