Good reputation is a key to corporate health
Damage to brand and image is the number one risk to business, according to Aon’s 2008/09 Australasian Risk Management Benchmarking Survey.
It topped the list in the 2007/08 survey too, which is interesting when you consider how much the global business environment has changed over the past 12 months.
Of course the power of a good reputation, as expressed in brand and image, has long been acknowledged. It’s the stock-in-trade for corporate marketers, and billions of dollars are spent to raise brand profiles through advertising, promotion and sponsorship.
Resurrecting reputations after bad things happen is more problematic.
There have been some extreme examples of misguided image protection, like airlines being photographed painting over aircraft tail logos at crash sites.
As Aon Australia’s CEO Steve Nevett says, no one in business wants to experience the kind of brand fallout that has been suffered globally by failed banks. So the top ranking for reputation comes as no real surprise.
“Many risks were identified leading into the current financial crisis, but not adequately assessed or addressed due to the attractiveness of making short-term profits,” Mr Nevett said.
“With the benefit of hindsight it would appear that the culture of risk management in organisations needs to improve.”
When observed in the rear-view mirror, it’s hard to imagine some businesses ever thought they’d get away with “cowboy” antics. But is “spin” the way forward? No, say the experts.
Hopefully the world is learning that good reputations are gained – and maintained – when businesses genuinely strive to be good corporate citizens.
The US-based Sirota Survey Intelligence organisation says one of the most important lessons to emerge from the recent failure of several prominent financial institutions is that many businesses still don’t understand the true nature and power of corporate social responsibility (CSR).
It notes that one of the hallmarks of a strong CSR program is the recognition that acting responsibly is in an organisation’s best interest, at least if the goal is long-term business sustainability.
It’s about sound business practice that does not disadvantage stakeholders or the business itself by taking unsustainable risks. It’s not about feel-good philanthropic acts that mask toxic business practices.
If you look in the top 20 risks in the Aon chart there aren’t many that won’t potentially be affected by brand and image.
For example, liquidity is up six points at No 7 and credit is up four points at No 19.
Not surprisingly in the current climate, these concerns about business assurance-type risk factors play heavily on the minds of CEOs and shareholders.
Human resource is steady at No 4. It’s worth noting that businesses with bad reputations don’t attract or retain good staff.
Corporate social responsibility is widely practised by Australian business. Within the insurance industry there are some fine examples of insurers and brokers taking the lead, notably in the area of climate risk.
However, it’s in other areas of risk that the industry can have a strong influence. As the people who deal with the risks of others, the industry’s vigilance on client risk management practices is essential.
If, as Aon predicts, insurance premiums rise across the board in 2009, the easing of downward price pressure will present some opportunities to do this.
With improved management of related business risks, brand and image are protected. So in the long run, “doing the right thing” is also the best way a business can ensure it will survive and thrive.
It topped the list in the 2007/08 survey too, which is interesting when you consider how much the global business environment has changed over the past 12 months.
Of course the power of a good reputation, as expressed in brand and image, has long been acknowledged. It’s the stock-in-trade for corporate marketers, and billions of dollars are spent to raise brand profiles through advertising, promotion and sponsorship.
Resurrecting reputations after bad things happen is more problematic.
There have been some extreme examples of misguided image protection, like airlines being photographed painting over aircraft tail logos at crash sites.
As Aon Australia’s CEO Steve Nevett says, no one in business wants to experience the kind of brand fallout that has been suffered globally by failed banks. So the top ranking for reputation comes as no real surprise.
“Many risks were identified leading into the current financial crisis, but not adequately assessed or addressed due to the attractiveness of making short-term profits,” Mr Nevett said.
“With the benefit of hindsight it would appear that the culture of risk management in organisations needs to improve.”
When observed in the rear-view mirror, it’s hard to imagine some businesses ever thought they’d get away with “cowboy” antics. But is “spin” the way forward? No, say the experts.
Hopefully the world is learning that good reputations are gained – and maintained – when businesses genuinely strive to be good corporate citizens.
The US-based Sirota Survey Intelligence organisation says one of the most important lessons to emerge from the recent failure of several prominent financial institutions is that many businesses still don’t understand the true nature and power of corporate social responsibility (CSR).
It notes that one of the hallmarks of a strong CSR program is the recognition that acting responsibly is in an organisation’s best interest, at least if the goal is long-term business sustainability.
It’s about sound business practice that does not disadvantage stakeholders or the business itself by taking unsustainable risks. It’s not about feel-good philanthropic acts that mask toxic business practices.
If you look in the top 20 risks in the Aon chart there aren’t many that won’t potentially be affected by brand and image.
For example, liquidity is up six points at No 7 and credit is up four points at No 19.
Not surprisingly in the current climate, these concerns about business assurance-type risk factors play heavily on the minds of CEOs and shareholders.
Human resource is steady at No 4. It’s worth noting that businesses with bad reputations don’t attract or retain good staff.
Corporate social responsibility is widely practised by Australian business. Within the insurance industry there are some fine examples of insurers and brokers taking the lead, notably in the area of climate risk.
However, it’s in other areas of risk that the industry can have a strong influence. As the people who deal with the risks of others, the industry’s vigilance on client risk management practices is essential.
If, as Aon predicts, insurance premiums rise across the board in 2009, the easing of downward price pressure will present some opportunities to do this.
With improved management of related business risks, brand and image are protected. So in the long run, “doing the right thing” is also the best way a business can ensure it will survive and thrive.