Reputation FUD (Fear, Uncertainty and Doubt)

August 6, 2014

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Key Point: Use of a reputation taxonomy – similar to Harris Interactive’s “Reputation Quotient” methodology – can enhance risk analysis activities where reputation is a factor as well as increase the value that risk practitioners provide in their organizations by enabling more informed risk decisions.

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Within the risk management discipline there is an activity called “risk analysis” that will usually entail understanding the drivers – or dimensions – of frequency and severity for potential adverse events. One common severity dimension is reputation; defined by Oxford Dictionary (n.d) as “The beliefs or opinions that are generally held about someone or something”. Intuitively we all know what reputation is but putting your finger on what it is – for a business – can be challenging.

Over the years, I have seen many approaches to accounting for a reputation impact. Some methodologies encourage estimating some dollar value that can be associated with customer migration, expenses to combat negative publicity or expenses to make customers whole when an adverse event has occurred. Other practices will assign ordinal values of reputation badness. Some companies have built reputation correlation factors in their risk models for scenarios that have a potential reputation impact. Finally, some companies just annotate reputation as being a loss driver but do not try to estimate or measure any severity factors. While all of these approaches have merit, all too often I see reputation discussed or analyzed in the form of emotions: this potentially bad thing feels bad, therefore we will look bad. There has to be a more logical way to analyze reputation regardless if the method is quantitative or qualitative in nature.

I recently read a Harvard Business Review blog regarding reputation, in which Loeb and McNulty (2014) referenced a reputation scoring methodology called “Reputation Quotient” (RQ) developed by Harris Interactive [Harris] (2014). I began digging around Harris’ site and found the “2013 Harris Poll 2013 RQ Summary Report” (Harris, 2013), in which they detail out the RQ dimensions and variables. Here they are:

Emotional Appeal:
• Feel Good About
• Admire and Respect
• Trust

Products & Services:
• High Quality
• Innovative
• Value for Money
• Stands Behind

Workplace Environment:
• Rewards Employees Fairly
• Good Place to Work
• Good Employees

Financial Performance:
• Outperforms Competitors
• Record of Profitability
• Low Risk Investment
• Growth Prospects

Vision & Leadership
• Market Opportunities
• Excellent Leadership
• Clear Vision for the Future

Social Responsibility
• Supports Good Causes
• Environmental Responsibility
• Community Responsibility

The factors outlined by Harris Interactive can help us as risk practitioners talk more intelligently about reputation as part of our risk analysis – especially if our employers participate in the Reputation Quotient Survey (as mine does). For any scenario we are analyzing, where there could be a potential reputation impact, we can ask ourselves if the adverse event lends itself towards violating one of these factors. My intuition is that many assumptions about reputation would be challenged using such an approach. In addition, the RQ variables may be idea candidates for factors in quantitative statistical model to better understand severity.

Quantifying reputation can be challenging but talking about it an in objective and logical manner offers benefits. The more knowledgeable and objective we are in understanding squishy problem spaces like reputation the more information we can provide to our stakeholders to make more informed, effective risk management decisions. Better decision making ultimately creates value for the organization as it facilitates decisions around expense optimization, ensures tactical and strategic goals are being met and reinforces adherence to ethics and values.

References

Harris Interactive Inc. (2013). The Harris Poll 2013 RQ Summary Report.  Retrieved from http://www.harrisinteractive.com/vault/2013%20RQ%20Summary%20Report%20FINAL.pdf.

Harris Interactive Inc. (2014a). The Harris Poll Reputation Quotient. Retrieved from http://www.harrisinteractive.com/Products/ReputationQuotient.aspx.

Loeb, H. and McNulty, E.J. (2014, August 4). Don’t Trust Your Company’s Reputation to the Quants. Harvard Business Review Online. Retrieved from http://blogs.hbr.org/2014/08/dont-trust-your-companys-reputation-to-the-quants/.

“reputation”. (n.d.) Oxford Dictionaries Online. Retrieved from http://www.oxforddictionaries.com/definition/english/reputation.


[BOOK REVIEW] The Communicators: Leadership in the Age of Crisis

December 23, 2010

I just finished reading The Communicators: Leadership in the Age of Crisis by Richard Levick and Charles Slack. For regular readers of this blog – you may recall a two part series back in 2009 on this blog – here and here – where Mr. Levick participated in a question and answer format on the topic of reputation risk. I have a lot of respect for the work Mr. Levick and his firm Levick Strategic Communications performs for their clients. “Why?” you might ask; the answer is risk management and leadership management.

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RISK MANAGEMENT

The majority of the readers of this blog have information risk management backgrounds. So I will speak to risk management first. I am going to define risk as the probable frequency and probable magnitude of future loss. For those familiar with the FAIR risk analysis methodology – specifically the taxonomy – you will recall that in the “loss magnitude” side of the taxonomy there are concepts such as “duration of loss”, “effect of loss” and “secondary stakeholders” that can inflict secondary loss against our company when a bad event occurs.

The Communicators is filled with examples about how an individual, business leaders, or organizations as a whole – can impact (both good and bad) the duration and effect of loss as well as effectively manage the perceptions of secondary stakeholders – when a bad event (or crisis) occurs. As risk practitioners, it is no longer acceptable to just know that a big loss event can impact our employer’s reputation or other more-tangible loss forms. We have to be able give real –yet practical – scenarios and examples of loss forms. Better yet, we need to offer additional value by asking tough questions that could shed light on a systemic weakness in existing plans to deal with a crisis when it does occur.

For the information risk practitioner, the following sections stood out to me:

Section 1: The Blind Spot. While this section is more about courage and leadership; there are time honored nuggets of wisdom in this section that we should embrace no matter what your role or title in the organization is.

Section 6: Leadership in the Digital Era. Social media is a double-edged sword – every information risk practitioner knows it. While social media can enable our company it can also be an information distribution mechanism that can damage our company’s reputation and ability to minimize loss in minutes compared to days, weeks or even months. Read this section to get great perspective on social media and the risks associated with it.

Note: With regards to the subject of risk management and its relationship with “bad” events. A crisis does not need to be initiated by something “bad” or an actual loss event. The Communicators gives a few examples of these scenarios (Rule #35; When Facts Don’t Matter, Forget The Facts).

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LEADERSHIP MANAGEMENT

As a former Marine, I cringe when I hear the words manager and leader used synonymously. Some organizations now even call all their managers “people leaders”. Philosophically, I can appreciate what is trying to be accomplished. But let’s face it there are managers out there that could not lead their teams out of an open door. I make such analogies to convey that leadership means something special to me. Thus, when I pick up a book that contains advice or examples of leadership – it better be good. The Communicators far exceeded my expectations.

If I was mentoring someone on the topic of leadership, using The Communicators as a mentoring aid and only had time to discuss one section; that section would be…

Section 9: Internal Leadership. The concept of ‘servant leadership’ is not necessarily new. Levick writes “Servant leadership defines the supervisory missions in terms of helping subordinates succeed and achieve through appreciation and reinforcement, not intimidation” (206). Just imagine a company where this approach was really embedded into its culture – not just a talking point on a PowerPoint slide deck that is helping your co-worker catch up on sleep and drool on him or herself. Better yet – forget about the manager / subordinate or corporate training aspect – what if everyone applied the concept of “servant leadership” in some or all aspects of their lives? Imagine how much more different our relationships and quality of life could be.

Leadership is not just about you and something you do relative to others. It is a mindset that can be leveraged at various levels of abstraction (personal, social, professional…) for those willing to embrace it.

In summary, I really enjoyed The Communicators and highly recommend it to anyone in the information risk management profession or anyone else that is serious about managing their career – regardless of your role or title.

Bene valete ac me vobis prodesse spero (“I bid farewell and hope I may help you”)


Reputation Risk Q&A – Richard Levick (2 of 2)

August 6, 2009

reputation-balloon

This is part two of a reputation risk Q&A with Mr. Richard Levick; President and CEO of Levick Strategic Communications in Washington, DC.

Part one can be found here.

6. In your opinion, how do you distinguish between worst-case reputation loss versus expected reputation loss?

Richard Levick: One word – experience. That’s how you anticipate what’s coming next and prevent the worst-case scenario from coming to fruition. It’s all about staying one step ahead.

Today, the period of time between the gating event that alerts you to a brand crisis and the bet-the-company moment is increasingly indistinguishable. When video of two Domino’s employees defiling customers’ food was posted to YouTube earlier this year, one million people – a number greater than those who subscribe to The New York Times or The Wall Street Journal – had viewed it within the first 48 hours. What that tells us is that crises now move faster than ever before and that companies have to be ready to act at moment’s notice. That means preventing and responding to reputational risks and crisis needs to be in the DNA. You don’t get that by accident. Or maybe you do, but at a terribly high price.

To do it right and prepare ahead of time means knowing what regulators, Congress, or state attorneys generals are going to do next. It means anticipating the next moves of the plaintiffs’ bar. It means monitoring the blogosphere and other social and digital media for intelligence as to where the traditional media may soon be heading. It means identifying likely company risks now and extrapolating what this means in terms of Search Engine Optimization, High Authority Bloggers, and social media. If you are reading this last sentence and don’t understand what I mean, your company is at far greater risk than you think.

To get started, build a relationship with crisis managers now – before you need them – so that you can build the trust that fast action demands. In crisis, you’ve got to see how the dominos – no pun intended – are lined up and know how they’re going to fall. It’s the only way to keep up with a news cycle that is now measured in minutes, not hours.

7. What are the key controls an information security risk analyst should take into consideration when assessing reputation loss impact (or magnitude)?

Richard Levick: With virtually every traditional journalists now regularly reading blogs for story ideas, careful monitoring of the blogosphere provides invaluable intelligence as to the scope of the reputational damage that may result from IT security breach.

That means knowing the high-authority bloggers – those with the greatest influence over perceptions – that cover your industry. And it also means being ready to engage them should a data breach occur. By bringing bloggers into the fold, companies allow themselves an opportunity to shape the narrative before it influences the traditional commentary to follow – and thus limit the reputational damage potential at play.

8. Do you have any tips for effectively communicating reputation risk to middle management and executive leadership?

Richard Levick: In today’s media environment, the C-Suite has to know that everything it does – or chooses not to do – can potentially impact the corporate brand. That means always thinking like your consumers, investors, regulators, and stakeholders that run the gamut – and taking their perceptions into consideration whenever a decision that could potentially impact these audiences is made.

I think middle managers need to own issues like understanding who the High Authority Bloggers are and having personal relationships; anticipating risks and knowing who controls those terms on the search engines; tracking YouTube, Twitter, and other sites for signs of consumer or stockholder dissatisfaction or industry unrest; and recommending instant positive intervention. Middle managers need to think differently. Today is a good day to start.

9. Do you have a favorite reputation risk engagement that you are willing to share (regardless of outcome)?

Richard Levick: I often look back to what Hasbro did during the 2007 lead-paint scare because it demonstrates how a crisis can be transformed into opportunity if a company articulates leadership in solving the problems at hand.

While Hasbro did not initiate a single recall during the lead paint crisis, the company recognized that its entire industry was under siege. Inaction could have led to guilt by association in the Court of Public Opinion. More important, remaining on the sidelines could have allowed a significant opportunity to differentiate itself from the competition to slip by.

So, rather than sit back and let the competition take the heat, Hasbro stepped up by implementing a “Total Safety Program” and making the initiative a central element of its traditional and online marketing strategies. As a result, the company became the “gold standard” around which all of its competitors were forced to rally. Though it wasn’t directly impacted by the crisis, Hasbro took action to abate it. As a result, its October 2007 earnings jumped 64 percent from the previous year.

10. Are there any good sources of information you can recommend for learning more about this subject?

Richard Levick: I would point to four such resources maintained by my firm…

Levick Strategic Communications’ Bulletproof Blog™ (www.bulletproofblog.com)…

Our e-newsletter, High Stakes™ (http://www.levick.com/resources/highstakes/)…

Our Crisis Communications Desk Reference (http://www.levick.com/crisis_communications_desktop_reference/)…

And our book, Stop The Presses (http://www.levick.com/resources/books/stop_the_presses/).

Also, I would encourage your readers to keep an eye out for our next book, on leadership during crisis in the digital age, which will be coming out in early 2010.

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I intend on posting some of my thoughts on Richard’s answers in an upcoming post. I hope you found Mr. Levick’s perspective to be as useful and intriguing as I do. Regardless, thank you Richard for participating in this effort; I look forward to continued interactions.