reputation risk

  I just recently saw the term "reputation laundering" in an article I was reading on the plane (which is where I seem to spend alot of time these days). I always like to mention new phrases that involve the word reputation. It is one of my favorite pursuits (which is pretty pathetic if you think too much about it). So I went to search for the term to find the article again and came across over six thousand mentions of the term.  The Guardian seemed most closely associated with the term because of their reporting on the practice in the UK, so they say.  What is it? It is the practice by institutions or individuals to disguise the source behind wrong-doing. Not a good thing. Just thought I'd call attention to the phrase in case anyone else found it interesting. On another note, a colleague sent me an example of reputation response and recovery (thanks J). It an interesting interchange from the CEO of Deutsche Bank. Apparently Foodwatch approached Germany's largest bank to warn them about the bank's speculation in the agricultural market that they said was increasing hunger and poverty worldwide. Now what was different here is that the playbook changed. The CEO -- Josef Ackermann -- rarely responds to these types of criticisms.  At first, the bank rejected the accusations in Foodwatch's report and petition. But in short order, the CEO responded in a letter to the head of Foodwatch by saying he shared their concern and would review the bank's activities in the trading of agricultural commodities: "I share your sadness that so many people on our planet continue to live in poverty and must go hungry." And Ackermann wrote in his letter:

"No business is worth risking the reputation of Deutsche Bank."

 This week we launched our excellent survey on what it takes to socialize a brand. It is among top marketing and communications executives in companies around the world. One of the drivers of world class social brands is being ever so careful about the assaults on a brand's reputation.  We learned in the survey conducted with Forbes Insights that executives of world class social brand companies are 35% more likely than the average global company to report that their brand experienced an online crisis in the past year that affected its reputation. These social champions who have dealt with a recent online crisis are no stranger to the risks of the hyper-connected world — two-thirds (66%) report that they deal with negative online commentary on a daily basis (vs. 51% of total global companies). The latter point was good news to me although perhaps not so for companies. The reason I say that is because I often get asked about how often companies experience reputation crises and I quickly respond "daily." Our research reveals that nearly two-thirds of socially aware companies are dealing with reputation threats and its just the tip of the iceberg. Just this week we saw Netflix and RIM in the news -- some self-inflicted and some not.  If you want to read more about the blackberry crisis and my comments, go here. These types of online crises will only increase as the world gets smaller, more people go online and more are eager to share their opinion about brands.  Being vigilant is the job of everyone. Lets not fool ourselves -- we all have to play cop.

  As you know from reading my blog, one of my great interests is online reputation management, particularly in times of crisis. At Weber Shandwick, we have conducted research starting way back on this topic….from Safeguarding Reputation to Risky Business: Reputations Online to Reputation Warfare and more to come. This past week I learned of some new research from Altimeter Group, authored by Jeremiah Owyang. They surveyed 144 social business program managers as well as conducting interviews with 63 corporate practitioners and providers. This included our very own David Krejci in our Digital Communications group about our social media crisis simulator Firebell.  I liked David’s quote (“experience the paralysis”) which is what Firebell does – it gives you the heart attack moment when social media has your company in its sights.  Since digital defense has been an important element of what we do, we were delighted to share information on this resource.  Some of the facts (read the full report here) worth noting are as follows:

• Be prepared. More than three-quarters of  social media crises could have been diminished or averted if companies had invested their resources internally and strategically. Of the advanced companies identified by Altimeter, 13 of the 18 have a clearly defined crisis plan with clear roles, responsibilities and action steps.  But they found that 56% of all companies had no clearly defined plan (that’s when the paralysis sets in).
• Companies need social media policies. These policies guide employees on how to participate in the social universe.  Left unguided, employees are uncertain or oblivious how to participate online and probably do so and go off the guard rails. Reputational risk is heightened, not lessened, when no social media policy is in place. In their survey, 83% of all companies they surveyed had a formal policy in place but among the more advanced ones, all 18 or 100% did. Interestingly, 8% had a policy specifically prohibiting employees from engaging on behalf of their companies. While I have traveled around the world, I have seen this to be true but it does not seem to deter most people and in fact, most definitely increases anonymity online. 
• Ongoing education is critical to managing online crises well. I found this section of the report very helpful because there is so much more that companies can do.  An example was given of a company that has a certification program with over 60 online courses.  Companies could certainly do better at social media training, whether it be brown bag lunches, speaker series, internal newsletters, etc.
• Create a scalable hub and spoke system to lead the social media strategy. The more advanced companies have a center of excellence at the hub with oversight for strategy, governance, training and education, measurement and vendor identification.  The centralized hub works closely with the cross-functional and cross-business unit support teams (the spokes) to support the overarching strategy and common policies. The hub is usually operated through marketing and/or corporate communications. This corporate social media team typically consists of 11 people. 

There is a lot of good common sense and best practice advice in this report. Take a look. We have a lot of work ahead of us to make our companies digitally safe.

I recently had a discussion with someone about self-inflicted and non-self-inflicted reputational disasters. Most of the reputation crises I have worked on and written about were self-inflicted because the early warning signs were there in the first place and leadership had an opportunity to change course. Unfortunately, the early warning signs were ignored or deemed inconsequential. An article in strategy + business, the Booz & Company journal, discusses the concept of self-inflicted black swans (a surprise occurrence that causes a major impact) and provides excellent food for thought.  Essentially, the author points out that there are ways to detect if the culture is ripe for these kinds of disasters and ways to protect against their occurrence. And it all gets down to the organizational culture or DNA. There are some very good suggestions such as clarifying who is really in charge of identifying risk exposure, aligning incentives so that people are rewarded for anticipating and disclosing risk and third, creating unfiltered pathways so that those at the top hear the "ground truth" and not just what they want to hear. The bonus for me after reading the article was learning about some stats that the authors uncovered. Since I am always looking for good stats to illustrate the downside of reputational disasters, self-inflicted or not, I want to share here:

The unintended consequences associated with a self-inflicted black swan can be devastating. They include negative publicity; huge, sudden costs; lost revenues; lawsuits and criminal judgments; and regulatory penalties. Analysis of the stock prices of companies that suffered such events in 2009 and 2010 in the oil, automobile, aircraft manufacturing, and financial-services industries shows that within two months after a visible self-inflicted crisis, an average of 18 percent of shareholder value was lost, relative to the S&P 500. Moreover, stock price performance continued to diminish over time: On average, shareholder value came down 33 percent within a year.

A loss of shareholder value of 33 percent over a year's time is catastrophic in my book.  It is worth learning how to prevent these unexpected surprises from occurring and figuring out how to turn these black swans into white ones.

I was quoted by Fortune's Geoff Colvin in the August 15th issue. He wrote about the Murdoch scandal and mentioned how "large ideas emerging from this story so far will influence companies of all types for years to come." One of those large ideas is that we have officially arrived at the pivotal point where reputation has an edge over financial performance. As Geoff says, this is Reputation's Moment. Companies may not have fully noticed but reputation is indeed "the new currency of corporate success." Music to my ears. In the article, Colvin makes a few points that could not be truer. I excerpt some below which includes my take on reputation as the new metric of corporate success.

"Previous major scandals were mostly financial; the numbers were lies. Not this time. The damage so far derives en­tirely from behavior—phone hacking and possible police bribery—that ap­pears to be illegal but has nothing to do with reported financial results. Wheth­er it’s illegal doesn’t matter anyway; it’s slimy, and that’s enough. News Corp. is deeply tarnished, and the financial ef­fects could be significantly bad. The company has lost about $5 bil­lion of value in the few weeks since the scandal hit. Longer-term effects could be much worse. “The greatest reputa­tional threat to News Corp., aside from criminal prosecution of Murdoch fam­ily members, lies within regulatory and policy circles,” says Rupert Younger, director of the Centre for Corporate Reputation at Oxford University’s Said Business School. News Corp.’s televi­sion businesses—TV networks, TV sta­tions, and satellite broadcasting ser­vices worldwide—are together a major source of profit, and they’re all subject to government regulation. Govern­ment leaders have treated News Corp. gingerly for years, but now “politicians who have been afraid to tackle such an important company are starting to feel that it may be possible to do so,” says Younger. “This could literally destroy News Corp.,” in the sense that the com­pany could be broken up.

Long-term damage to the company’s reputation among customers, employ­ees, communities, and others could also hurt. “In this new reputation economy, people care about whether a company shares the same values as they do,” ob­serves Leslie Gaines-Ross, chief reputa­tion strategist at the Weber Shandwick communications firm. Her reading on the scandal so far: “A clearer demon­stration of the direct relationship be­tween corporate reputation and cor­porate well-being is hard to imagine.”

 These two ideas, the one-man prob­lem and corporate reputation, are ob­viously related. At News Corp. they’re two sides of the same coin. Yet Rupert Murdoch never seemed to put them to­gether. Long before this scandal, he said, “Our reputation is more important than the last $100 million.” He was right.

 In this brave new recessionary world, we have evolved into a reputation economy where companies are trading on their reputations like never before. They are trading for better regulatory favor, more loyal customers, higher skilled talent, more positive word-of-mouth and more capital. Reputation has become an account in credit that you can draw down on or add to. In this new reputation economy, people care about how decisions are made and whether companies share the same values as they do. It is not just value, as in dollars earned, but also values, as in standards maintained, that has become a crucial element of corporate success.

Interesting to hear that The Wall Street Journal is outright asking subscribers how the Murdoch scandal at News Corp might be impacting its own reputation. Many companies prefer not to bring up an issue they are facing, even when it is often the elephant in the room.  Some companies, however, think that surveying customers about an issue or self-inflicted crisis is a smart way to demonstrate that they care enough about their reputation to ask the tough questions or they simply want to know in the name of transparency.  Apparently the WSJ is asking subscribers, of which I am one, "What impact, if any, do the illegal acts by News of the World journalists have on your impression of The Wall Street Journal?" or something close to that. And my favorite question from what I have read this morning is whether the CEO of a company should be held responsible "for all the actions of all its employees, no matter how large the corporation is" on a 1 to 10 scale (disagree completely --->agree completely).  I think I know the answer to that one. My guess is that 75% to 85% of subscribers, AKA business executives, will give this statement an 8/9/10.  All in all, as my colleague said to me....a brave move.

 

The incidents were the latest examples of what security experts call “reputational attacks” on media companies that publish material that the hackers disagree with. Such companies are particularly vulnerable to such attacks because many of them depend on online advertising and subscription revenue from Web sites that can be upended by the clicks of a hacker’s keyboard — and because unlike other targets, like government entities and defense contractors, they are less likely to have state-of-the-art security to thwart attacks.

As I was reading this article this morning on how several media companies were dealing with recent hackings, I noticed a call out box saying "So-called reputational attacks follow controversial reports."  The hackings over the past few days of news programs on public television came about because of negative stories that were clearly disliked  by certain parties. I would underscore that most entities -- government, military, corporate or otherwise -- are having a very difficult time with hackers, privacy, leaked information, etc.  I was somewhat surprised when I saw "reputational attacks" in quotes as if this was a new label of sorts. Reputational attacks online have become commonplace and not just assaults on media companies. Either way, the most interesting element in the discussion on these "so-called reputational attacks" is the common refrain that they are usually the work of repressive governments. And these attacks are much more than reputation vandalism or Web site defacing. In fact, this is reputation warfare. No doubt about it. The reputational risks that companies and organizations are increasingly facing continues to amaze me.

 I could not start this blog post without mentioning my deep sorrow for those lives lost in Japan due to the earthquake and tsunami.  The news is devastating and I am very sad for this amazing country. However, if there is a country with the ability to come together to move forward, Japan is the one with the finest reputation for preparedness and commitment to the community. I wanted to share some research I read about in The Economist on the wisdom of debunking company myths and rumors online. If you are a regular reader of my work, you have heard me mention that I think it is a good idea to refute rumors about your company and its products if they become too prominent online and spiral out of control. However, researchers at Kellogg's School of Management and Stanford Business School  found that it actually hurts to repeat rumors on a company web site.  They found that by highlighting the myths on company web sites (in order to explain why they are wrong), the rumors are actually propagated, not diminished. I think that there is always a risk to communicating about the negative but that companies need to join the conversation about hearsay that harms their company or their brands' reputation. Being silent in some cases can cause even more damage because of the inaction and going on the record with the facts. Of course, the art to disclosure is knowing when to address myths and rumors and when enough is enough. That requires constant monitoring online to know when hearsay is spiraling out of control. I do agree with the researchers, however, that when companies repeat myths and rumors that are circulating online, it increases the likelihood that search engines will pick them up and give the rumors greater  prominence in the search rankings. But as the article itself notes, the antidote to hearsay is making sure that there are good things also being said about your company to counter the negative ones. As the researchers say, the positive facts "nudges people to doubt nasty things they may hear about the company in question." Therefore countering the rumors and complementing them with good information on what the company is doing or the brand is promising and delivering should work in your favor. Ultimately, it is maintaining the right amount of the good stuff to counter the bad stuff. And knowing when it is the right time and right place to speak up and stop rumors in their tracks.

  Where is privacy going?  Do all newborns have digital footprints in addition to those inky-stained ones on birth certificates? Are we going to need pre-natal reputation managers in the near future? A survey by AVG  among mothers in several countries found that 81% of children under the age of two had some form of digital profile including photos online. This percentage was even greater in the US where an astounding 92% of children under two have an online profile.  It gets even stranger so hold on. Nearly one quarter -- one in four! -- have uploaded their pre-birth sonograms online. Again, US moms are more prone to sonogram-posting (34%).  Is technology getting out of hand? And nearly one in 10 (7%) moms have picked out an email address for their young ones with nearly as many having a social network profile already. Privacy has to be among the greatest risks facing humankind as we march into the future. Parents have to learn to be extra cautious with their privacy controls if they want to maintain some sort of safeguard for their growing children. Of course, young parents today have only known life online. All of this makes me wonder if  in year 2050, we have to employ baby reputation managers to protect our children's backgrounds and photographs from being used improperly? We have a lot of work ahead to understand the true dimensions of privacy loss and how it will affect this generation coming up. We have already seen the downsides (along with the upsides of course) in recent years but the early warning signs of concern are here.

Korn/Ferry just released some new research Buy Isoprinosine Without Prescription, among executives and board members worldwide. Purchase Isoprinosine online no prescription, Risk management is clearly a topic du jour among the executive class. The survey found that nearly six in 10 (57%) are spending more time and attention on risk management, købe Isoprinosine online, αγοράζουν online Isoprinosine. Kjøpe Isoprinosine online, bestill Isoprinosine online, In light of the rolling crises that seem to be playing out in the media over the past eight months, it pays to be prepared and know what's on the horizon, rx free Isoprinosine. Chicago, Illinois. Houston, Texas, In our business at Weber Shandwick, crisis response and crisis preparedness seems to be on the upswing, Isoprinosine for sale, Isoprinosine over the counter, thereby highlighting top execs' concern over being in the "hot seat."

Two findings stood out. First, a full 59% said that the recent scrutiny on reputation risk has had a good effect on how Boards perceive the need for crisis preparedness and reputation management, Buy Isoprinosine Without Prescription. Steve Mader at K/F says that the survey "shows the majority of companies have already taken practical steps to enhance their risk management practices and awareness." I agree, where can i find Isoprinosine online. 5mg, 50mg, 75mg, 100mg, Secondly, as you have heard me say and post, acheter en ligne Isoprinosine, acheter Isoprinosine bon marché, Buy cheap Isoprinosine no rx, the CEO is the guardian of the company's reputation which includes such components as people, products/services, reasons to buy Isoprinosine online, Isoprinosine FDA approveds, responsibility, financial performance, Indianapolis, Indiana, San Francisco, California, Where can i buy cheapest Isoprinosine online, leadership and "values" or "ethics." K/F asked these executives who at the company has direct responsibility for risk management and the lead candidate was the CEO at 43%. Next to the CEO came the COO at 19%, 400mg, 450mg, 500mg, 625mg. Where can i buy cheapest Isoprinosine online, CEOs continue to get all the blame for ethical or reputational transgressions and all the credit when things go right. That's the deal, Indianapolis, Indiana, San Francisco, California. Isoprinosine samples. Online buy Isoprinosine without a prescription. Order Isoprinosine online overnight delivery no prescription. Isoprinosine withdrawal, snort, alcohol iteraction. Buy Isoprinosine from canada. Köpa Isoprinosine online, Osta Isoprinosine online, Jotta Isoprinosine verkossa. Japan, craiglist, ebay, overseas, paypal. Australia, uk, us, usa. Isoprinosine in cats, dogs, children, man, woman, men, women. Isoprinosine over the counter. Where can i buy Isoprinosine online. Order Isoprinosine online c.o.d. 0.4mg, 0.5mg, 1mg, 2.5mg. Isoprinosine from canadian pharmacy. Nashville-Davidson, Tennessee. Portland, Oregon. Buy Isoprinosine online no prescription. Boston, Massachusetts. Charlotte, Carolina. Buy Isoprinosine from mexico. Buy Isoprinosine without a prescription. Buy Isoprinosine online cod. Buy Isoprinosine without prescription. Where can i find Isoprinosine online. Buy cheap Isoprinosine. 400mg, 450mg, 500mg, 625mg. Farmacia Isoprinosine baratos, Isoprinosine online kaufen. Reasons to buy Isoprinosine online. Philadelphia, Pennsylvania. Phoenix, Arizona. Acheter en ligne Isoprinosine, acheter Isoprinosine bon marché. Baltimore, Maryland. Milwaukee, Wisconsin. 5mg, 50mg, 75mg, 100mg. Purchase Isoprinosine online. 125mg, 150mg, 200mg, 250mg. San Diego, California. Dallas, Texas. San Antonio, Texas. Order Isoprinosine no prescription. New York. Los Angeles, California. Chicago, Illinois. Houston, Texas. Isoprinosine trusted pharmacy. Isoprinosine FDA approveds. Rx free Isoprinosine. Austin, Texas, Memphis, Tennessee. Isoprinosine coupon. Buy Isoprinosine no prescription. El Paso, Texas. Washington, D.C. Seattle, Washington. Buy cheap Isoprinosine no rx. Oklahoma City, Oklahoma. Las Vegas, Nevada. Where can i order Isoprinosine without prescription. 1000mg, 2000mg.

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