Reputation Risk Ranks As Top Strategic Risk
Online consumer ‘search behavior’ empowered with internet technology is disruptive to traditional business models. In the past “traditional” media helped your business grow...but, no more. Yellow Pages, Newspapers, TV, Radio & Magazines are all experiencing their biggest declines in history. Today, while Social Media, Mobile, Video, SEO & Internet Marketing are essential to being competitive in today’s marketplace….it's a "5-Star" Online Reputation that actually builds trust and motivates a customer to engage with your business.
For example, did you know that Searching for any Company Name & City Reveals the Company’s Reputation!
Exploring Strategic Risk
As reported by the WSJ, in a recently released global survey, Exploring Strategic Risk, Deloitte identifes “Reputational Risk” as the number one risk for businesses. Just three years ago Reputational Risk ranked 3rd to brand and economic trends for strategic risk according to companies surveyed back in 2010. Today it is the key strategic risk identified by senior executives.
This rise of reputational risk is seen by senior executives as key threat to their business models. It is a reflection of the fact that social media has become a major disruptive technology. Nearly 50% listed social media above other technologies such as analytics, mobile applications and cyber-attacks.
Henry Ristuccia, a Deloitte Global Leader, says...“The rise of reputation as the prime strategic risk is a natural reaction to recent high-profile reputational crises, as well as the speed of digital and social media and the potential loss of control that accompanies it...the only sector where reputation hasn’t risen as a strategic risk factor is financial services where it was already #1 following the financial crisis and subsequent fallout.”
According to the Deloitte report, attention and investment in strategic risk management at senior management levels is growing. However, the major challenge is to move beyond just traditional operational, financial and compliance risk and supplement business strategy with ‘strategic risk management.
Technology Viewed as Both an Opportunity and a Strategic Risk
After reputation, companies identified their business model as the second highest strategic risk in 2013, and forecast this to remain the case in 2016. The role of technology is a primary concern as more than 50% of companies surveyed believe that... “technology enablers and disrupters are emerging that could threaten their established business models.” Mr. Ristuccia explains...“The risks of social media are well-known, but concern about how new technologies affect the core business model is also top-of-mind.”
Strategic Risk Management (SRM) Is Evolving
Strategic risk management is constantly evolving as nearly all of the companies surveyed (94%) have changed their approach to strategic risk management over the past three years. Presently, 66% of firms surveyed have established a common definition of strategic risk. More companies in Asia-Pacific, and the technology, energy and financial services sectors have done so than elsewhere. When asked which strategic assets they are investing in to counter perceived strategic risks, companies identified human capital (47%), brand name and reputation (32%) and customer capital (26%) as key items.
Again, Mr. Ristuccia notes: “One of the most critical strategic risks is the ability to keep pace with innovation...companies that fail to keep pace may soon discover that a competitor’s innovation has become a major disruption to their business model.”
Yes, the Way Consumers Find Your Business Has Changed FOREVER! However, most business owners are 'blindsided' with bad reviews or even no reviews; and revenue loss. As Deloitt’s survey suggests, it’s time to investigate what it takes to ‘build, market & monitor’ a “5-Star" Reputation and implement a "Reputation-Risk Strategy"