For entrepreneurs and decision-makers, there’s one element that is becoming increasingly important for their business strategy: reputational risk.
As the name suggests, reputational risk is a threat to a company’s reputation. No business, no matter how big or small, is immune from reputational risk. Rumors, negative media coverage, legal action – there are various ways the ethics or character of your company can come under question.
When this happens, it can lead to significant damage to your reputation and brand. This can snowball to the point that it puts you out of business. As a result, it’s essential you take the right approach with your reputational risk strategy.
To help achieve that goal, here are some key mistakes to avoid with reputational risk.
Common Reputational Risk Mistakes to Avoid
1. Not following policies and procedures
It’s an obvious starting point, yes, but it is the most important. It is essential your company incorporates the necessary policies and procedures to minimize the possibility of a reputational risk making an unwanted appearance. With this approach, you can be consistent in your supply of high-quality services and products, ultimately making it less likely for a reputation-damaging mistake to occur.
The policies and procedures you utilize depending on your business. Say you operate a financial institution. In this situation, you have to pay careful attention to anti-money laundering (AML). A lack of stringent procedures and technology for AML compliance can lead to customers conducting illegal activities under your nose – and put your company in serious legal trouble.
2. Failure to predict potential scenarios
If you’re not prepared to predict potential scenarios, you will be at a disadvantage when one appears for real. With this in mind, it’s imperative you understand the types of issues that could crop up for your business.
Do you run a café where cleanliness regularly comes under scrutiny? Perhaps you craft custom furniture that needs to boast unparalleled quality? Maybe you guarantee next-day delivery for customers? Whatever the attributes are, you have to be realistic in identifying where potential problems can arise – whether that’s a drop in hygiene standards or delays with shipments.
By knowing about potential scenarios, you are in a better position to manage issues and learn how to respond appropriately.
3. Not educating employees
It’s not just you who has to be aware of reputational risk. It is something that needs to be ingrained throughout your organization, with every employee on board and working towards the same goals.
If you fail to educate your workers about reputational risks – and ways to prevent or minimize them – this will cause obvious problems down the line.
4. A lack of positive communication
Positive communication should be part of your plans at all times. Sending out constructive, helpful, and pleasant messages on a consistent basis, enhances your reputation in the eyes of the general public. The result: future damages generally have less impact.
Another important point of communication is speed. Whether it’s clients, employees, or customers, ensure you are fast to inform them about any new developments or how you plan to respond to incidents.
Mahesh Kumar is a dynamic marketing consultant and tech enthusiast with a passion for driving business growth through his innovative strategies and cutting-edge technology. With 6 years of experience in the industry, he has helped numerous businesses leverage the power of digital marketing to reach their target audience, build brand awareness, and increase sales.