What Most Concerns Corporate Boards After Finances? Reputational Risk

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.

Marketing 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.