Today's companies are under a much brighter spotlight and reputational risks have become a top concern for them. In the event of a crisis, they are forced to act with a much faster response than in previous years. Despite this, most companies have been slow to take preventative measures – they have not incorporated sufficient mitigation into their risk management strategies.
Managing a company's reputation has become extremely complex over time. Advancements in technology, changing media platforms and shifts in transparency expectations from the public have all contributed to the increased potential for companies to face a public relations crisis.
Chris Gidez, global energy practice leader at New York-based Hill+Knowlton Strategies Ltd., said "The Internet has created a lot of chaos for companies, for the media, for the public and investors. I'm not sure the number of crises has increased, but the number of them brought to the media's attention has increased.”
Reputational risk management is most effective when it's incorporated into a broader enterprise risk management program. It should be viewed as a significant process and senior management, the board of directors and even employees should be involved in its implementation.
Companies must develop pre- and post-event strategies to manage reputational risk and specifically prioritize risks so their strategy will successfully prevent any major crises.
As part of these preventative measures, maintaining the right insurance coverage provides a great safety net, in the event crisis does occur. Professional liability insurance protects against the potential risks a business will encounter as they go about their daily operations. It may be as simple as an employee's mistake or a third party vendor's miscommunication - whatever the issue, a solid insurance policy should be in place to offer protection.
Excerpts above taken from Business Insurance's recent webinar, “Crisis of Confidence: How to Protect Your Company's Reputation from Damage.”