Reputational risk is fast becoming one of the most important issues facing organisations.

Our recent survey shows a growing awareness of this trend among business leaders but it also reveals that many still feel unprepared to deal with the full range of possible crises that they face.

More worrying still, our exclusive insights, gained from interviews with over 100 directors of major businesses, employing more than 500 people and/or with annual turnovers above £500 million, reveal the widespread existence of what we term “the reputation gap.”

This has arisen alongside the emergence of a public that is more self-confident about its rights, that places greater emphasis on excellent customer service and demands higher ethical standards of organisations, thereby increasing the pressure on all business leaders.

Meanwhile, the explosion of social media and the ravenous 24/7 news machine have transformed the way in which an incident can develop into a full-blown crisis, as well as introducing new channels through which organisations need to manage communications around these events.

Organisations don’t own their reputation

These trends mean that today, more than ever, organisations don’t own their reputation. Recent history is littered with examples of companies and public bodies that have suffered not just reputational damage but financial loss as a result of incidents that have been badly handled.

Given the increase in the level of risk, how well are most organisations placed to handle this increasingly important issue? The answer, according to our research, is that they’re doing better than they were just a few years ago – certainly before the financial crisis – but they’re not doing enough. And this is something that they themselves realise.

Take cyber security and hacking. These are seen as the most serious risks for business leaders, according to our survey.  The largest proportion of those surveyed feel they need to be better prepared to face this issue, and it’s seen as the most common reputational threat over both the 18 months and five-year time periods.

As the effects on financial markets and businesses of the crash of 2008 have appeared to be tapering off, political instability in the form of the Brexit vote, the Trump victory and the continuing tide of populism that seems set to sweep across Europe has increased unease.

Second most important concern: financial security

Financial instability is, therefore, not surprisingly, the second most important concern facing business leaders over the next 18 months and the following five years, our survey found.  Worryingly, though, only 15 per cent of business leaders feel that this is an area they can be better prepared for.  Shareholders, employees and others should be concerned about what could be seen as either complacency or confusion.

Another example of the mismatch between preparedness and threat concerns staff welfare. With the continuing public anger at the behaviour of large corporations and concerns about the gulf between the highest and lowest paid allied to the fact that these days every employee, armed as they are with a smartphone, is now a reporter, this risk here is greater than ever.

Overall, the findings go to support our concerns about the “reputation gap” that many organisations currently face.  Put simply this is the discrepancy between what organisations say they’re doing and what they’re actually doing in terms of risk management. They’re simply not being proactive enough in protecting themselves.

Just how big is this reputation gap?  Our survey reveals that a quarter of business leaders are not confident that their crisis communication and operational crisis structures are fully integrated.  More strikingly still, just one in seven business leaders are very confident that they are.

You can’t stop things going wrong – but you can prepare

Whether it’s a cyber attack, an industrial accident or the actions of a rogue employee, the fact is that no organisation, however well managed, can prevent things from going wrong.  What they can do is to be prepared to act quickly, confidently and effectively when these serious problems do arise.

Organisations need to be more transparent.  Naturally they’re concerned about revealing their risk management procedures, as this could be useful for those who present a threat to them. However, demonstrating that you take a risk seriously and that you’re taking action to handle the situation should it explode into a crisis is essential.

The accelerating news cycle means that organisations have to act more quickly than ever before to a crisis.  Reporting lines and procedures need to be ready to go live in a moment, even outside office hours.

The upside to this increasingly rapid news cycle is that an incident can grab the headlines but then fall down the agenda as old news more quickly than ever.  However, this only happens when organisations act quickly and release all the relevant information rather than succumbing to the temptation to hold something back.

Comms must be part of strategic decision making

With corporate restructuring, for instance, another issue that features prominently in our findings, organisations have to work proactively to explain their strategies and emphasise the positive aspects of these changes rather having to deal with the inevitable redundancies and closures as a crisis.

Perhaps most importantly, our survey proves that crisis and risk management communications need to be on the agenda of the board and must be discussed regularly.  The communications teams needs to be part of the strategic decision making process rather than simply being informed of decisions once they’ve been taken.

The evolving world of threat, crisis and risk management is presenting business leaders with new challenges. These challenges will have a detrimental effect on organisations with a reputation gap.

On the other hand, those who can anticipate the forthcoming trends and take the right decisions to ensure that risk management and crisis awareness is at the heart of their strategies and that they’re doing what they say they’re doing can protect themselves and, in the longer term, gain competitive advantage.

How can we help?

The Hanover Crisis Council has unrivalled experience at handling complex, high-profile issues on a global scale. We have brought together best-in-class advisors with deep knowledge of the Government, security services, media and business who can be called on for senior support during times of uncertainty.

Our Crisis & Risk brochure below gives further information on our services and expertise in this area.




For further details about the research, or to discuss crisis communications best practice, please contact our crisis experts via crisis@hanovercomms.com.