Posted May 27, 2011 8:42 am by with 5 comments

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When I first read the report Second Annual Board of Directors Survey – 2011: Concerns About Risks Confronting Boards from EisnerAmper I was a little surprised by the findings of what business risk was at the top of the list for corporate boards right after the classic financial risk: reputation.

Online reputation management and social media monitoring are near and dear to our hearts here at Marketing Pilgrim and apparently the fears have reached the highest parts of the corporate structure (finally!). The chart below shows just how important this area is to companies these days.

The executive summary of the report says quite a bit

Concerns About Risks Confronting Boards explores the issues facing American boards today, including financial risk, privacy and data security, succession planning, regulatory changes and fraud. What the results make clear is that a company’s reputation is paramount and all risks threaten this fragile asset.

Apparently there is enough reputation wreckage in the marketplace to have corporate boards stand up and recognize that this is an issue that is not going away but is only getting more complex.

The study later says

Many factors contribute to these concerns. The tools of today’s business heavily revolve around information technology, the Internet, the speed and degree of data transmission, and the pervasiveness of social media. Cloud computing, social media and accelerated product life cycles are just the latest contributors to risk. Cloud computing is becoming more of a reality for companies trying to wrestle with the vast amount of data they need to move quickly (and safely) around a global marketplace. Are boards notified when cloud computing is being used? Social media can make or break a brand and the fine line between the two must be managed. Product life cycles continue to shrink with the need for more speed, more brand building, more data and of course the burden of more risk. In conclusion, directors are facing more complex business issues than ever before, all of which require additional research on their part to stay abreast of risks and opportunities.

The net / net of this is that companies are finally realizing that their reputations are at greater risk than ever before and the old way of managing and protecting those reputations no longer work.

Before the Internet became what it is today it was much easier for companies to sweep something under the rug and oftentimes get away with it. Today, that ‘luxury’ is no longer available. Of course, the big problems still exist of trying to manage reputations through monitoring of online activity and programs at the ready to handle it when a company steps on a reputation land mine.

TrackurMarketing Pilgrim’s Reputation Channel is sponsored by Trackur’s social media monitoring tools. Plans start at just $18 a month and you are up and running in just 60-seconds!

It’s now safe to say that if your company is not actively monitoring your reputation through tools like our Reputation Channel sponsor Trackur and you are going forward without a real plan to handle such emergencies, then you are playing with fire.

To put it bluntly, I had a friend who worked on a local rescue squad who told me that (at the point he made the statement) he had never taken someone out of a wreck dead who was wearing a seat belt. That simple act of prevention for the possibility of a tragic event is truly a lifesaver for many. If corporations are not doing what is necessary to be ‘strapped in’ when they have a reputation wreck then any fallout is their own fault. It’s that simple.

So what are doing to keep your company from reputational risk? Do you have contingency plans in place if something were to happen? Do you monitor the Internet for signs that something’s not right? If you do that’s great. If you don’t remember that when you roll the dice the house usually wins.

  • The Internet has taken much of a company’s control and put it squarely in the hands of the consumer. Businesses no longer call the shots and consumers have just as much say about what their brand is as they do. I’m not surprised that reputation management has become a serious concern for many companies.

  • Great post, Frank! Companies can save themselves a lot of heartache if they have a reputation damage control plan in place *BEFORE* a need to utilize it arises! It never ceases to amaze me how few multi-billion dollar businesses choose to stick their heads in the sand in the face of controversy instead of facing issues full-on. The people who handle things up front win every time. (hey, Sony, are you reading this?)

  • Excellent article, and it’s no surprise that corporations are concerned about online reputation management. Our Austin online marketing company receives several requests per month from businesses that are either afraid to utilize social media — or are using social media and are apprehensive about the impact that customer/prospect postings (and employee postings) may have on their image and marketing efforts.

    But social media marketing is such a powerful resource, these companies can’t elect not to participate. Erin Jones nailed it — corporations need to plan their social media strategy and policies beforehand. This will enable them to avoid many problems and concerns, and take advantage of this great opportunity to engage customers in an online community.

  • Slightly surprised not to see customer service failure on the list as it is often a trigger of reputational damage and bad press on social media networks. Important to treat the problem at source as opposed to only looking at the symptoms

  • While it can be difficult quantifying how much negative exposure an issue may generate, responsiveness will be a key success factor to mitigating the reputational risk, making media monitoring all the more important.