Reputational risks may lead to reputational damage if you ignore the consequences of not considering reputational risks in time. However, to avoid or manage reputational risks, it is important to identify and measure them. Reputational risks and damage are specific to each business, yet you may find the primary ones associated with your brand through some means mentioned below. Read this article till the end to see how to identify reputational risks and measure them to prevent serious damage.
You may think that social media is one of the largest supporting reasons for reputational damage; how can it help us identify reputational risks?
Most customers take to social media to express their frustration and disappointment about a brand. Usually, it starts from a post on their profile where they express their resentment about a particular product or service. This first review can help save your business from long-term damage if you nip it in the bud. It is smart to have a community manager for the company who can keep an eye on what people think of the brand. You must try to keep words like “bad,” “poor,” and “uncooperative” away from your business on social media.
Study the Products or Service
Sometimes, you see multiple bad reviews about a company from multiple sources regarding the same product. As a business, you must find out the root cause of the issue and fix it as soon as possible. There may be a quality problem with the product mistakenly ignored by the Quality Control during manufacturing. You may also stop the production of that particular product for a while till the issue is resolved.
Consider Stakeholder Sentiments
Considering the stakeholder’s sentiments is essential for identifying and measuring reputational risks. Different stakeholders have a particular impact on your company’s reputation. For example, issues with the customers are considered a moderate risk. But when media is involved, it becomes a serious reputational risk.
Understanding the nature of the risk associated with the stakeholders and their perception of the company can help identify and minimize the risk.
Track Negative Events
Sometimes, as business owners, we understand the negative events of a potential reputational risk but let go of them. This may be fine sometimes if the benefit ratio is high. However, if the event can be seriously negative for your brand’s reputation, it is better to avoid it. Prevent further negative events by tracking and studying previous events that impact your business negatively.
Frequently Asked Questions
What happens if you do not identify and consider reputational risks?
If you do not identify the risks in time, you may have to face the consequences of reputational risks like business loss, tarnished image, failure to meet business objectives, loss in market share, etc.
What is the hidden cost of reputational damage?
The Hidden Cost of Reputation Risk by Oliver Wyman offers a new methodology to help identify and quantify reputational risks. It is based on four steps; defining the reputational risk, analyzing the available data, quantifying the reputational risk, and linking the risk to the reputational risk management framework.
What are the types of reputational risk?
Reputational risks are of various types depending on the cause and their impact. Common reputational risks include the vendor’s misconduct, low-quality products or services, failure to keep the stakeholders satisfied, and bad online reviews.
Identifying the reputational risks can save you from reputational damage caused by any likely factors. It helps you measure and find a better way to manage the risks. You can identify the reputational risks through social media, studying your products, understanding the stakeholders’ sentiments, and tracking negative events.
Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.