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ARC: HOW TO CONTEND WITH EMERGING RISKS AS THE ECONOMY CONTINUES TO RECOVER

Steering the public's expectations is key to reputation risk management

Reputation Risk Management

Johnson & Johnson Services Inc.'s handling of the 1982 Tylenol product tampering case still is regarded as the gold standard in reputation risk management, but shifting dynamics in media, technology and public expectations have compounded potential brand and image damage from a public relations crisis, said Chris Gidez, global crisis practice co-chair at New York-based Hill+Knowlton Strategies Ltd.

“One of the biggest differences is the speed at which information moves,” Mr. Gidez said during last week's Business Insurance Risk Management Summit. Today's 24-hour news cycle, the Internet and — perhaps most significantly — social media outlets have reduced the time a company has to respond to a crisis from days and hours to minutes and seconds.

“Companies must react to a crisis much more quickly than they would have had to 10 or 20 years ago,” Mr. Gidez said.

The ubiquity of amateur online journalism coupled with the steady degradation of objective analysis among major media outlets have significantly complicated the task of reputation risk management, he said.

“There's not lot of upside anymore for corporations in relying on news media for a fair shake,” Mr. Gidez said.

A key element of reputation risk management entirely within a company's control prior to a critical risk event is the degree to which it manages the public's expectations of its business practices, particularly as many companies have seen their stakeholders expand to include employees, nongovernmental organizations, community groups, activists and others, he said.

“Every one of them believes in some fashion that they have a right to the seat at the table, and they all have different expectations about what your performance should be,” Mr. Gidez said. “The delta between a company's performance and expectations of that performance is usually driven by the company itself, and it's a dangerous place. You won't be rewarded for meeting those expectations, but you'll be punished if you don't.”

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