Reputational Risks In Your Organization - Part 1

Copyright (c) 2010 Peg Jackson

Being pro-active about reputational risk vulnerabilities will not guarantee that organization will be exempt from adverse incidents. However, being pro-active about reputational risk vulnerabilities will give the organization a head start in preparing to deal confidently with these occurrences.

Begin by identifying those areas of your organization's organization, structure, governance, management and operations that could trigger a reputational crisis. By examining those areas of potential vulnerability, you can take steps to reduce the potential reputational risk and the likelihood that an adverse event will occur. Being aware of the vulnerabilities specific to your organization will also help to shape a Crisis Management Plan.

How an organization handles a crisis will be remembered long after the crisis has passed.

Discovering the Sources of Potential Reputational Crises

Reputational crises can stem from a myriad of sources - some present within the organization and some external including association with an organization that is experiencing a reputational crisis. Many organizations suffer reputational crises because there was very little introspection to identify the areas of organizational vulnerability. Although it is not an efficient use of time to try to identify every possible scenario in advance, the following will present those areas that often cause reputational problems.

Source of Potential Reputational Crisis.

Vulnerability sources emerge from all components of the organization. The intent here is to identify those areas that are the most common culprits in reputational risk crises.

Description of the Reputational Risk Issues.

For the purpose of this discussion, only the most likely issues will be presented. As you examine your organization for vulnerabilities, recognize that there may be some issues that are unique to your organization.

Possible Steps to Mitigate the Risk.

These depend on the organization and the industry - but serve to describe possible methods. The discussion presents some examples of steps used to mitigate risk. Be aware that your organization might need to apply other risk mitigation treatments. Your trusted advisors are important sources of information in determining the most effective risk mitigation strategies.

Governance and Management

The management and governance of any organization sets the tone for its operations. Common elements in reputational risk crises were the attitudes and actions of senior management and, by extension, the board of directors. Today's business environment for companies, nonprofits and academic institutions emphasizes a new governance paradigm in which boards are responsible for everything that goes on within an organization. This expectation by regulators, shareholders and the public has played out in a number of recent reputational crises. Here is a checklist for Governance and Management.