Risks are reputational. Image and reputation of the company

Every company that conducts commercial activity has such a valuable tool as reputation. As in the world of simple human relations, in the business sector this category is of a double nature: on the one hand, it can be an excellent opportunity to establish some new relationships, attract new contractors, to take advantage; On the other hand - with a bad reputation - the company may simply not be able to start business cooperation with someone.

In view of the fact that reputation is not a permanent phenomenon, and in the course of activity of any business entity it can change for better or worse, the company must constantly take care of it.

On the one hand, such "concern" can be called measures to constantly improve it, to develop a positive attitude of other companies and the public to this business entity. On the other hand, it can be the management of risks existing for each particular company.

In this article, we will consider how it should ideally be, how you can protect your company from loss of reputation and how other players in the market manage it at all.

Defining reputation

We begin, perhaps, with a general definition of such a category as "reputation." After all, as already noted above, from real life we know that this term implies the attitude of other people to one particular person who owns this reputation. In fact, this is the set of qualities that empower the one whose reputation is in question.

In the world of business relations, everything happens quite similarly. If one business structure wants to start a relationship with another, first of all, what it will be oriented on is the image of the company (that is, how other market participants see it, in particular, those who already have experience of cooperation with it ).

And, of course, depending on the reputation of the company, its business will develop or, conversely, decline. This is what is so important in the case when it comes to the relationship to the subject of economic activity.

Reputational risks

Threats, which represent the likelihood of damaging the image of the company, the attitude of other stakeholders to it, are called, respectively, "reputational risks". If you correctly approach their definition and promptly identify where they may lurk and what specific threat companies represent, you can prevent a lot of negative consequences for the business as a whole.

This is the task of risk managers working in this area of business. They manage risk management, keeping the image of the company from any threats. In turn, the right approach in this matter allows you to conduct business, develop it and in every way improve the company's financial performance.

Types of risks

Again, because in our understanding the image of the company is something abstract, it is not always possible to understand what the above-mentioned risks are. How can they be measured, to assess what needs to be done to understand where they are manifested and, of course, how to protect themselves from them?

In turn, we understand what financial risks look like . This, in essence, the opportunity to incur monetary losses in one form or another. Where businesses can lose their investments, there are clear financial risks. To protect yourself from them means not to make such investments, to refrain from them, judiciously assessing the ratio of your chances of making a profit and losing everything.

By a similar principle, reputation risks also work. The company can receive a negative attitude from those with whom it maintains business ties, as well as from the public - people who are direct consumers of its products or services. Only in order to understand more specifically what the reputational risks can manifest themselves, we can conditionally divide them into three categories. Read more about them in the following sections.

Corporate risks

The most common group of threats, the purpose of which is the company's reputation, are corporate risks. They relate to the activities of a specific business entity and can be expressed in completely different moments in its work. The scope of production, sales, management of the company and many others, they all can be exposed to corporate reputation risks. For this reason, each risk manager must ensure that each of these categories is protected. How is this expressed in practice? Very simply: each of us has faced examples of such measures against corporate risks in everyday life.

For example, protecting the reputation of a particular company will be expressed in the fact that the latter conducts environmentally friendly production, conducts socially significant activities, initiates various activities related to charity, and so on. That is, the image of such a company is built on the fact that it positively influences certain spheres of life, correctly organizing its internal processes.

Global Risks

Another category of factors that form the reputational risks of the company is more global. In particular, these are the factors that pose a threat to the whole sphere of production. For example, they take place in the case when the public is reprehensible, for example, to a number of enterprises because they, on the contrary, negatively affect certain spheres of human life. Only in order for "risks" to take place, it is necessary that the factors that negatively affect the image of the whole industry are revealed suddenly. This would mean that such reputational risks were justified and enterprises that did not take care of them were seriously damaged.

Local risks

Finally, the third kind of factors that can adversely affect the company's valuation by other business entities or consumers of services and goods are risks that relate to some part of the company. A clear example of such a phenomenon can be, for example, the quality of the top managers of the company or its management, which were seen in some negative (from the point of view of the public) stories. Alternatively, such risks can occur if the company's managers have begun to implement incorrect (and, perhaps, even reprehensible) from the perspective of other people, massive layoffs, cuts in wages and so on.

That's why every leader tries to work hard to create an attitude favorable to himself (and, consequently, for the company) to employees, introducing various incentives, increasing pay and making other similar steps. Not only does this all motivate employees, such actions also preempt and reputational risks that could harm business.

Priority of risks

In fact, every risk manager who adequately assesses the situation on the market can (and should) clearly identify which of the risks are the priority. Let's give a simple example. On the one hand, the company is engaged in the production of products that are harmful to health supplements; On the other - is going to hold massive layoffs. From the point of view of the consumer, of course, the quality of the product and its effect on the human body is more important. After all, if information on the harmfulness of products is made public, sales can fall substantially. On the other hand, the risk manager understands that the probability of revealing the fact of "harmfulness" of products is minimal, while they will be informed about dismissals at once.

In this case, in the short term, the company should think about how to cope with the risk of loss of image as a result of layoffs, and on the long-term - to "look clean" in the eyes of the buyer and convince him that the presence of products that are harmful to health - It's not so scary. A vivid example, by the way, of successful "cases" in this direction are the largest megacorporations of McDonald's and CocaCola. We all know that the food in "Mack", like "Kola", is seriously harmed. Nevertheless, we continue to buy both.

Correctly prioritized risks determine how well the company will cope with them and, thus, retain its image. This is what is called "management of reputational risks" and their competent avoidance.

Reputation in the eyes of counterparties

It is also important to understand that the reputation of the company in the understanding of other business structures and in the eyes of the client is far from the same. After all, it displays this company from different points of view. How the reputation of the company changes in the event that you look at it with "business eyes" and "customer's eyes", it is very easy to understand. In the first case, the key is the integrity of the company, its relation to partners, the distribution of roles in the business, the fulfillment of its obligations, its timeliness.

Reputation in the eyes of the client

As for what the subject of economic activity looks like in the eyes of the client, the success of the company in the sphere in which it works is best indicative of this. So, if this is a large enterprise or a well-known brand, it is obvious that its services / products are in demand and are in great demand in the market. If the subject has a tarnished reputation, accordingly, with the sale of products, he may have problems. In this case, there is a shortage of risk managers of specialists working on the company's PR.

The image of enterprises

Another important point, which I would like to emphasize in the framework of this article, is the specific character of the company or enterprise. Obviously, there is a big difference between how the tainted reputation of an industrial giant affects its work and, say, the image of a local grocery store. In the first case, the enterprise is unlikely to be threatened, since it is engaged in the production of one-purpose goods. There are a lot of similar examples: large factories and factories often have a not very enviable image in the public eye.

Another thing is the business reputation of a legal entity that provides direct services. Here the role of the opinion of other people is significantly increased, and the latter begins to influence the entire business even more. If a local newspaper writes that a stale dairy product is sold in a small store, selling them here will be times more difficult.

Banking reputation

Absolutely another thing is the reputational risks of the bank. Since financial institutions have their own, special market structure, it requires a special trust of people (in particular, when it comes to depositors). A person should be ready to give his money as a deposit, therefore, in this case, the image of the bank should be the highest. If there is information about problems with payments or about changing the management of a particular banking institution, depositors can try to take their money from this bank as quickly as possible, which, again, will negatively affect all of its activities.

"Do not lose face"

The main task of each risk manager is to properly perform a reputation risk assessment. This, first of all, those factors that can negatively reflect on the image of the structure, "drop it" in the eyes of customers and other companies. To prevent this from happening, one should not only "try not to lose reputation", but also constantly improve it, bring it to a new level. To do this, the largest companies create special funds, spend a lot of activities, turn to different tools, so that only the reputation of the company is improved and "cleared".

Restoration of reputation

Finally, if there is any scandal or unwanted information was made public, the image of the organization can be saved. Whether it's the business reputation of a legal entity or the client's opinion, all this can be rectified by choosing the right strategy for future behavior. Often, business leaders, whose reputation has suffered as a result of some information scandals, some unpleasant situations for the public and the like, first of all apologize and show that they are fully involved in this process, understand how important this is. Then the compensation measures begin, and so on. However, this is another conversation, not related to the subject of the article.