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Member, Beacon International Group, Ltd.
Various surveys are conducted regularly on what risk managers consider to be their most worrisome risks, and injury to reputation usually appears somewhere on the list.
Aon Corp., which performs a biennial global risk management survey, recently released its latest version. In Aon’s 2007 survey, reputation was considered the No. 1 risk, but in the 2009 edition, it fell to No. 7. The economic slowdown was deemed the top risk in this year’s survey.
I would argue that injury to reputation remains a huge problem, for a few reasons. First, a good reputation is critical to sustaining business, retaining customers and reaching new ones. Second, reputation takes a long time to build, and it can be damaged quickly. Third, threats to reputation can come from out of the blue, making mitigating the risk to reputation a particularly difficult endeavor.
A prime example of how unforeseen events can damage reputation came in the form a videotaped prank by two former employees of Domino’s Pizza earlier this year. The duo, who worked at a Domino’s store in North Carolina, thought it would be funny to contaminate food intended for patrons. Needless to say, their video quickly attracted viewers on YouTube.com and forced Domino’s to scramble to reassure its customers that the prank was an isolated incident. See Domino’s apology in the YouTube video below.
By most accounts, Domino’s resolved the crisis through prompt action. But this kind of trouble could befall any company. How would you manage reputation risk?