Reputation rules, so protect it well

Business survival and reputation management are inextricably linked. A 2020 survey found that 63% of executives believe reputation defines their business’s market value.

In the past 20 years, it has become ever more important to safeguard reputation. As the Harvard Business Review noted in 2007, “In an economy where 70% to 80% of market value comes from hard-to-assess intangible assets such as brand equity, intellectual capital, and goodwill, organisations are especially vulnerable to anything that damages their reputation.

Since then, the rise of social media has made reputation management even more problematic. Anyone can voice an opinion in seconds. The trick is to avoid a situation arising, monitor the online mood through social listening, and contain the conversation.

Hospitality is a sector particularly subjected to this more modern risk. A food and drink operator can suffer a calamitous collapse in business following negative publicity. This could be due to unsafe foods, lack of allergy controls, unhygienic kitchens, poor inspection ratings, or failure to comply with health and safety legislation.

It could relate to harassment, discrimination or poor treatment of employees. Customers could suffer harm through a slip or trip, an electrical fault, a failure to maintain healthy hot water systems, or swimming pool attendant negligence. The possibilities are numerous.

Then there are threats such as assailant attacks, often focused on hospitality outlets and quickly leading to a loss of attraction for the venue at the centre of the storm.

To reduce the risks, it is vital to have robust policies and practices in place and to embed health and safety practice, as well as respect for all individuals, within company culture. Ensuring that training is thorough is of paramount importance, as are channels through which employees can voice concerns or raise observations.

Having a written crisis management policy is also hugely important, so there is a set pathway for crisis handling, with all measures geared at damage limitation. Knowing an insurance policy will provide access to crisis management specialists, if required, can also offer reassurance. Having insurance in the locker makes sense.

According to your business and its size and scope, it may also be beneficial to talk to a broker about services such as Reputational Risk Benchmarking, which assesses resilience to future crisis-related events. Such services, available through brokers, help prevent incidents before they occur by highlighting where loopholes may exist.

Suffering a hit to reputation through a cyber-related scenario, such as hacking, is a very real 21st-century risk and one that should also be addressed through good practice and the back-up of a standalone cyber insurance policy.

Here again, having access to specialists should cover needs to be triggered, can mean the difference between extensive reputational damage, downtime and loss of trade, and a swift IT rectification exercise that can contain the situation and impact customers as little as possible.

Considering what could impact your reputation is the starting point for better business protection. Work through the possibilities with a broker and you will appreciate how strong risk management, supplemented by the right insurance covers, can provide essential layers of protection that can help your business survive even the trickiest of adverse situations.

Talk to a member of the L Wood team today by calling 01274 515747 or submit an online enquiry form, and we’ll get back to you.