15 October 2003

Reputation Risk...more than PR and Marketing Communications

By Peter L. Higgins
Managing Director
1SecureAudit LLC

Reputation risk is becoming more of a topic of discussion these days. The loss of reputation results in several outcomes both economic and personal. The fact is that most of the time organizations are "Reacting" to a crisis, news leak or some other corporate failure.

You don't have to name names of people or companies to understand the impact that reputation has on the success or demise of an organization. What has to change to lower the severity and likelihood of loss events associated with "Reputation"?

First you have to ask yourself a couple of key questions:

1. What is your reputation worth?

2. Are you being Proactive or Reactive in managing and safeguarding your reputation?

The PR and marketing communications processes in your organization may have certain facets of the solution to better reputation risk management. However, these processes are designed with out the consciousness of proactive threat anticipation, detection, prevention and remediation.

What has become more clear to executives in proactive oriented companies is the requirement for a specific and strategic approach to Reputation Risk Management. This approach encompasses an emerging theme from the early nineties pioneered by author Peter Block. We call it Organizational Stewardship.

Organizational Stewardship as a core guiding principle is the cornerstone in managing an institutional reputation risk management process. It has three components that support this rekindled idea of applying the concepts of stewardship to the organization:

- Economic Accountability

- Information Management

- Business Integrity

Reputation Risk Management is about the proactive monitoring and management of a portfolio of threats in the organization. Several categories include:

1. Intellectual Property and Information Assets

2. Demonstrations, planned boycotts and social activism

3. Physical infrastructure including employees and suppliers

4. Legal threats including class actions, insider trading or whistle-blowers

Today Microsoft is due to begin closing its free Internet chat rooms in 28 countries because of threats from pedophiles and junk e-mailers. This is an example of proactive reputation risk management. Unfortunately, this has opened the door to another related threat of hackers hijacking Instant Messaging (IM) accounts.

Although Microsoft contends that IM is safer than the chat rooms it is already known that both AOL and MSN messenger systems are already being exploited with malicious code and worms that can potentially expose organizations to additional digital risks.

Organizational Stewardship is a guiding principle. Once it is embedded into the organization it begins to permeate the mindsets of the individuals who are responsible for the conscious reputation risk management processes. Over time, these individuals help influence the corporate mindset, philosophy and ethics to a new found level.

Someday soon the executives in the board room will realize that managing reputation is not about keeping secrets and fighting fires. They will realize that they need to find a proactive, preventive and relevant strategy for achieving Organizational Stewardship in their company.

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