Home Leadership CEOs Shine by Owning Organization’s Reputation Risk

CEOs Shine by Owning Organization’s Reputation Risk

by Guest Writter
Keri Calagna, Principal, Deloitte &Touche LLP 
Empower a culture that seizes crises as opportunities to drive brand resilience

A familiar story is on the front pages every few months — a CEO ousted from a company, a tarnished brand and customers flocking away to their competitors. The untold story is of the thousands of CEOs that excel at managing and cultivating a company’s brand and reputation. They strategically make sure they avoid scandal, and if a crisis does spring up, they are prepared to tackle it. Those CEOs successfully turn brand and reputation risk into brand equity through planning and practice for potential crises — developing strategic risk capabilities to seize crises as an opportunity to show what their organization is made of when under the scrutiny of public spotlight.

Now more than ever, strategic risk management is a key driver of organizational resilience. The traditional focus of managing risk has been on operations, compliance, and technology. But over the last 20 to 30 years, we have seen a shift in how the marketplace defines a company’s value. It is no longer entirely based on financial statements. According to the results of a Deloitte Touche Tohmatsu Limited 2014 global survey on reputation risk, Reputation@Risk, more than 25 percent of a company’s market value is directly attributed to its reputation. With the world more interconnected than ever, an issue at one company can create ripple risk that impacts other companies and even other industries. The internet and social media enable fact or opinion to circle the globe in mere moments.

This new landscape may seem like modern brand threats are frequent, unmanageable, and unmeasurable. But CEOs actually wield considerable control over their organization’s brand and reputation and, ultimately, its resiliency. CEOs have the power to shape organization-wide culture — what its people prioritize, the importance of the work, the vision of the whole enterprise going forward. CEOs set the master narrative and control the pace of response during a reputational event but, more importantly, provide the vision needed to sense reputational threats, plan multiple brand threat scenarios, and foster a culture of preparedness that enables a thoughtful and rapid response.

Cliche as it may sound, preparedness starts at the top. The CEO assumes ultimate responsibility for brand and reputation, assigns specific executive functions, and empowers everyone in the organization to promote and protect brand and reputation.

In order to effectively develop a strategic risk planning posture to protect brand and reputation, it is important to understand how brand is different from reputation. Brand is an aspirational measurement of how an organization wants to be viewed by its stakeholders. Reputation is how an organization is actually perceived by those stakeholders. Reputation is closely tied to actions — what an organization does as opposed to what an organization says it does. A reputational event can betray an organization’s brand promise. And since a single reputational event can destroy in a matter of moments what took decades to build, it’s critical to get the response right.

In addition to building a effective rapid response capability, CEOs can bolster organizational reputation — and therefore brand — by shaping internal perspectives. Employees are an organization’s best brand ambassadors. CEOs that arm employees with a clear vision for the organization and a compelling brand story can empower them to be credible brand ambassadors and authentic brand advocates. When ignored, at best, employees remain neutral. At worst, they become an organization’s most believable detractors. Consistent messaging and trusted leadership from the top is needed.

CEOs can also emphasize employee accountability, an area where many organizations often fall short. Although the CEO owns brand and reputation, everyone in the organization is responsible for it. In addition, CEOs can create an environment where employees and third-party vendors feel comfortable reporting potential reputational risks. A healthy whistle-blower culture facilitates a more complete view of risk from the inside.

CEOs can also tap external resources for an independent assessment and measurement of risk. Some professional services companies have robust programs designed to audit and measure reputation independently. Focus groups, secret-shopper-style exercises, and other measures can help determine how well an organization can weather a storm.

As the market landscape becomes more complex and competitive, risks to brand and reputation increase. Fortunately, CEOs have sophisticated tools to develop reputational resilience, including customized scenario planning, modeling, risk-sensing and stress-testing. Building on these strategic risk assets can help CEOs to develop a governance structure to prepare for reputational risks before they occur and enable their organizations to respond swiftly and effectively.

[Image Courtesy: Joe The Goat Farmer / Flickr]


About the Author

Keri Calagna is a principal with Deloitte &Touche LLP and leader of the Strategic Risk Solutions practice. Keri has more than 19 years of experience providing risk advisory and assurance services to clients. Keri helps clients transform strategic and integrated risk programs to power performance and achieve business objectives. She is currently helping clients build greater brand and reputational resilience. She may be reached at kcalagna@deloitte.com.

You may also like

Leave a Comment