Friday, March 4, 2016

Reputational Risk in an Online World

"Your brand name is only as good as your reputation." - Richard Branson 

In business your reputation is everything, and in today's world, not only do you have to worry about how people see your brand in the physical world, but also how they see it online. With the advances in technology, the ability to express your negative feelings of a business to the world with just a click of a button, it's important for businesses to be aware of their online reputation.

Reputational Risk 

According to a recent survey from Deloitte, 87% of businesses believe that reputation is their largest risk area, and only 19% of them think their business is adequately prepared. To protect your business, it's important to identify and mitigate these reputational risks. You have to worry about health and safety incidents, product recalls and regulatory investigations that could damage your reputation. While a cyber attack isn't considered a reputational risk, the extended business disruption caused by that attack could lead to customers thinking less of your business. Here are just a few risks and events that could cause damage to your reputation:
  • Product Recalls 
  • Concerns Over Product Quality
  • Allegations of Poor or Improper Business Practices
  • Health or Safety Incidents, involving either Employees or Customers
  • Regulatory Investigations
  • Negative Associations with Third Parties

Online Reputation

While social media is a great way to engage your customers, it's also a great avenue for unhappy customers to spread negative feedback about your business. With technology at our fingers tips, its now easier than ever to express your opinions about products, services, businesses, etc. This makes it extremely important that businesses guard their reputation and keep a constant eye on their online presence. In the event someone does post a bad review or negative comment about your business online, it's important that your business respond quickly and effectively. According to Dimensional Research, 90% of customers check online reviews before buying products, and 80% make decisions based on those reviews. Therefore, online reviews have the ability to damage your reputation, which could result in business loss.

Protect Your Reputation

While there is no way to physically prevent someone from posting a negative review about your business online, there are some strategies you can use to lower your reputational risk. Limit exposure and respond to crisis using these tips:
  • Create Strong, Relevant Corporate Values - upper management needs to regularly communicate those values through every level of the business.
  • Integrate a Risk Evaluation into Business Planning - identify opportunities, threats and assumptions. Develop hypothetical situations to identify how your reputation could be affected.
  • Promote Positive Interactions with Customers and Other Stakeholders - strengthen your reputation before a crisis occurs. Customers appreciate regular, positive interaction which can be achieved online through social media, etc. 
  • Develop a Reputation Plan - train everyone at the company how to recognize reputational crisis, and put together a response plan and response team.

Limit Your Risk

While its inevitable for any business to experience some type of reputational damage, there are ways to limit your exposures and cover your losses. Insure the Lake is here for all your Lake of the Ozarks business insurance needs - give us a call at 573-348-2794 to discuss your unique risks and figure out the best way to protect your business, from both reputational and physical damage.

Request a Free Quote Online! Contact Insure the Lake today for all your Lake of the Ozarks insurance needs! 

About the Author: Steve is a double back-flip insurance ninja. He was named Young Insurance Agent of the Year by the Missouri Association of Insurance Agents in 2010 and is a Certified Insurance Counselor. When he is not helping customers, he enjoys community service, Latin dancing with his beautiful wife and going on adventures with his two awesome sons.

Steve Naught, CIC
3736 Osage Beach Parkway
Osage Beach, MO 65065
Next to Golden Coral