Loss of reputation and brand value is the second biggest risk to UK business according to leaders responding to the 2015 Allianz Business Risk Barometer Survey.
Top of all risks is business interruption and 3rd is Cyber Crime and IT Failure. Of course, most risks are interrelated and most crisis will generate some knock on impact to reputation and trust – particularly if handled badly.
The risk management process should ensure that the probability of supply chain, IT failure and other risks are cost effectively managed down, but, what about the impact? How can that be managed?
Yes, the crisis must be effectively managed after the event with open and honest words and deeds but what about creating a softer impact by maximising consumer trust in the first place?
Maximising consumer trust is commonly talked about and aspired to but rarely is it a deliberate strategy for managing risk (or improving outcomes for that matter).
What’s missing in the assessment of risks is the question of scale and when we look at the league table there is no reference to big or small but we must assume that, in the minds of the survey responders, each of the crisis are big ones! After all, a single 10 minute IT failure is not likely to worry business outcomes.
In the case of Reputation and Trust as well Brand Value we are talking about consumer emotion and consequential switch to competitor or disengagement. This is less or more likely depending on the prevailing depth and spread of trust. If trust is high it is likely the impact will be lower and vice-versa.
Unfortunately, in the UK only 52% of the informed public trust business (Edelman Trust Barometer 2015) and only 32% believe what business leaders say (Ipsos Mori Truth telling Survey 2014).
These figures are survey based and they are indicative – what they actually indicate is that a big risk is being taken with consumer trust.
Is it a risk worth taking? It is certainly a risk that can be managed!
The high ranking of emotion based risk in the Risk League Table explains why the human factor in Risk Management is the subject of a two day CPD Course hosted by the University of Liverpool at their at their new campus in London. The course will examine the psychology of risk and leave delegates with tools and techniques for deliberately maximising consumer and stakeholder Trust as part of Business Planning and Risk Management.