By Charles T. Wilson, CMC, CRM, RPLU
‘Reputational Risk’ is often in the news, and we’ve seen many role models to show how to handle – or not – a business crisis. Arrogance, greed, secrecy and easy shortcuts seem to characterize financial institutions and coal mines, Toyota, BP, BART, and now PG&E. We are witnessing some terrific learning moments for risk management.
Business reputations are almost always an organization’s most important asset. A simple definition might be: “trustworthy and high-quality people, products and services.” We all know reputations are carefully built everyday; since they can be lost with one false step, doesn’t it make sense to review what NOT to do?
The Road to Ruin ~
- Ignore very low probability or remote problems – like earthquakes, lawsuits, and gas pipeline explosions – because there’s nothing you can really do about them anyway.
- Don’t annoy your customers, suppliers or employees with risk-related questions, best practices or concerns – that might take their focus off the sale or their job.
- Don’t worry about devastating risks – they probably won’t happen to you. You can just download a generic crisis plan, like others have done, and put it on the shelf.
- Contingency or disaster-recovery plans can be time consuming, and they’ll be vague anyway – you can probably wing it if something goes wrong.
- Don’t bother to train employees or improve their crisis management or decision-making skills – they’ll do fine with your leadership. Besides, what if they quit? You’ll have wasted all the training time and money.
- Let your cost-center managers – responsible for maximizing profit – take care of risk assessments and any needed plans. They probably know best, and what’s a minor conflict of interest in the long run?
- Cross your fingers and believe your insurance protects intangible assets like your reputation; that you can ‘buy’ your way out of any problems that may arise.
Avoid the heartache ~
Seriously, I recommend you take some simple steps and repeat this recipe regularly to preserve all you’ve built:
- Raise the big, thorny issues in your business, and discuss the consequences with all employees – they need to know you care and how they should act in the best interests of the firm, your customers, and their employment.
- Keep ears open for complaints – think carefully with an open mind, then answer them quickly and personally; don’t fight with upset customers – fix the problem and thank them for their valuable input.
- Don’t cut corners on quality and safety – get the best advice and do your best to implement recommendations promptly. If something ‘costs too much’ to fix, stop doing it immediately.
- Create one or two simple, but real, contingency or mitigation plans and role-play a practice scenario at least once a year.
Charles T. Wilson is a Certified Management Consultant (CMC®), confidential advisor, speaker and Principal of RiskSmart Solutions®. He is a specialist in insurance and risk management and does NOT sell insurance. Clients save time and money with objective advice on getting the right broker and service, the best coverage and price, with the least amount of risk. charles@risksmartsolutions.com | 510-685-3883 | www.risksmartsolutions.com. © 2000-2011 RiskSmart Solutions®. Download PDF copy here: http://bit.ly/qtCwui.
Meet The Experts
Review articles and blog posts by our list of insurance experts!
Click Here For Participating Firms
VIEW RATINGS FOR INSURERS
Enter name of Insurance Company and press GO button.