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BEWARE THE COBRA

8 PRACTICAL REPUTATION RISK POINTERS

The VW crisis has highlighted once again just how important it is to protect the intangible equity of our companies and our investments. With less than 25% of a risk register now insurable and more than 50% of our company equity composed of intangibles, it surprises me why so few companies today have upstream reputation risk forums in place to proactively mitigate the top license to operate risks across their business and to take advantage of license to grow and innovate opportunities!
Here are 8 pointers to thriving and surviving in a reputation economy:
  1. Put in place a Chief Reputation Risk officer with multidisciplinary reporting lines and budget to establish a lifecycle reputation risk management program to effectively identify, assess, control and measure. Resource Reputation Risk Management.
  2. Be clear on the company’s risk appetite and risk tolerance when it comes to risks related to the seven drivers of reputation: governance, leadership, economic performance, products and services, innovation, workplace and community. Drivers are different across each market so identify and build from your global reputation currency.
  3. Appoint a multi-disciplinary upstream risk forum of key stakeholders from across the company to more effectively manage known and emerging risks. This should include Board Leaders, Functional Business Leaders and Stakeholder Owners. Assess for opportunities as well as risks.
  4. Set aside the necessary capital reserves to manage/mitigate these risks and any crisis leadership opportunities if they were to happen. Social license to Grow and Innovate matters just as much as Legal and Regulatory License to Operate Risks. Factor for both.
  5. When assessing for risk, factor outrage into the hazard and probability equation. Remember the risks that upset people are not the same as the risks that kill people.
  6. Scenario Plan. Is this likely to become a cobra or a python? The Python is ‘the slow-burning crisis which steal up and gradually crushes the company issue by issue’ (Melamine Milk Powder - SanLu). The Cobra – ‘‘the sudden crisis which catches a company unprepared’ (Malaysian Airlines). (Moore and Seymour, 2000). 
  7. Establish a data driven early warning system and engage proactively with your stakeholders. Watch for weak signals and be authentic and transparent with your stakeholders.
  8. Communicate your action plans and progress made to your stakeholders. Communicate, communicate, communicate.
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I appreciate that you are reading my post. At RL Expert, I write about board related issues - corporate strategy, human capital, reputation risk, technology, corporate governance and risk management trends.
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About Leesa Soulodre:
Managing Partner and Director of RL Expert Group, an international reputation risk management think tank and consulting practice and Asia Associate of the Reputation Institute. A Member of the Global Advisory Council of NY Investment Advisory Firm, Cornerstone Capital; an Innovation Advisor to the University of Illinois Urbana Champaign Advanced Digital Science Centre, Singapore and Board Advisor to Belgian PR Software firm, Prezly and US Sports Analytics firm, Autoscout.
Research Fellow of TIAS - the School for Business and Society, working to deliver predictive reputation risk analytics for financial strategies and complex global supply chains - r3Intell.
Connect: Leesa Soulodre, Managing Partner RL Expert Group - ls@rlexpert.com
www.rlexpert.com
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