A business’s reputation is one of its most valuable assets, which is why risk managers spend so much time worrying about it getting damaged
Reputational risk is arguably the primary concern for all businesses. They may not always consider it this way, but reputation is a company’s licence to trade. Lose your reputation, and that licence has gone.
Conversely, a firm that enhances its reputation is likely to succeed at the expense of its competitors.
Companies in Singapore understand the importance of reputation perhaps more than those trading out of other countries in the Asia Pacific region. This is primarily because of the image of Singapore itself as a country synonymous with quality, excellence and trust.
Responding to a crisis
When things go wrong, as they invariably will do with any large business, it is the way in which a company responds to the problem that often counts more than the original trouble itself in terms of reputational impact.
However, while the insurance industry offers a number of products that will pay out to varying degrees in the event of reputational damage, prevention and mitigation is always best.
For InterContinental Hotels Group’s (IHG) head of risk management for Asia and Australasia Shuh Lin Tan, reputation is everything. “In the hospitality industry, delivering a great guest experience is key for us, so confidence in our brands is important,” she says.
“But this cuts across other industries, where a lapse in confidence in the brands could make them fail. Consider the manufacturers of popular cars or phones. People buy their products because it makes them feel good.
“While this is clearly something positive, it also makes businesses extremely vulnerable if something happens that results in negative publicity.”
Speed of communication
The speed of communication in today’s world is part of the reason why reputation is such a prominent risk, says Schneider Electric’s group insurance risk manager for the Asia Pacific region Juliette Gelpi, who is also a board member of Parima.
“Things move very quickly in Singapore and you have to be very strong on reputation,” she says. “We have to be better than our competitors in terms of the way in which we communicate with the markets.”
Social media is an area of communication that companies must handle carefully. Vigilance is important, as is the way in which a business reacts to problems, says IHG’s Tan.
“We cannot control what people say – and this is something that often keeps us awake at night. Having clarity of thought and purpose is crucial when tackling social media after something has gone wrong. Fundamentally, if you have done the right thing, if people are aware that you have taken proper steps to deal with something, this will help to mitigate some social media risks.”