Reputation resiliency drj 3.28.2012 final
 

Reputation resiliency drj 3.28.2012 final

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Discussion about the lack of reputation literacy among ERM and business continuity community and how reputation risk can be factored into planning

Discussion about the lack of reputation literacy among ERM and business continuity community and how reputation risk can be factored into planning

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Reputation resiliency drj 3.28.2012 final Reputation resiliency drj 3.28.2012 final Presentation Transcript

  • Reputation Resiliencyin a Volatile EnvironmentSpring World 2012Disaster Recovery JournalMarch 28, 2012Randall Till, Till Continuity GroupLinda Locke, Reputare Consulting
  • What keeps your CEO up at night?Reputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 2
  • What keeps your CEO up at night?Reputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 3
  • What keeps your CEO up at night?Reputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 4
  • Reputation Resiliency:Key points to explore today •  The world has changed •  Reputation: measureable value, threats and penalties •  Gaps in risk literacy •  Enhanced models for ERM and BCM •  To get there: integrate reputation •  Value at all levelsReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 5
  • Some risks don’t surface intraditional revenue filters Scraps debit card fee after consumer backlash Penn State abuse scandal chilling in details FedEx vows to track down delivery man who tossed computer monitor over fence Komen Foundation In Contortions Over Justifying Planned Parenthood DecisionReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 6
  • Why are companies surprised?Reputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 7
  • New world, new risksTraditional risk mindset is no longer adequate - Limited, insufficient revenue filters -  Operational-only risk preparation and mitigationToday’s environment requires resiliency: -  Strength, flexibility, swift recovery -  Comprehensive management of operational AND reputation risk -  Adaptability to a continuously changing environmentReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 8
  • Resiliency: The ability to adapt to a continuously changing environment•  A systematic process improvement for more comprehensive risk management•  Two sides of resiliency: ­  Prevent conditions of risk ­  Manage consequences of event Source – Carnegie Mellon Software Engineering Institute•  Increases value to the organization Reputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 9
  • Resilient organizations understand,measure and manage reputation Daily reputation fluctuationReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 10
  • A resilient organization manages bothoperational AND reputation risk Operational Resiliency Managing for Ability to manage risks Resiliency and function/adapt • Ongoing measurement throughout the lifecycle of and monitoring disruptions • Balancing the risk and Reputational Resiliency cost tradeoffs Ability to maintain good stakeholder perceptions • Taking an enterprise and supportive behavior focus at all timesReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 11
  • Operational resiliency is ownedby the company Risk Assessment (RA) and Business Business Security IT Operations Impact Analysis (BIA) Continuity Business Continuity Disaster Recovery Operational (BC/DR) Resiliency ModelReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 12
  • But reputation is owned bystakeholders Reputation = judgments and perceptions of others •  Customers •  Suppliers •  Investors •  Advocacy groups •  Regulators •  Policymakers •  General publicReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 13
  • Stakeholders perceptions developvia three channels • Direct experience with the company • What others say about the company (online and off) • What the company says about itself (marketing, PR, etc.)Reputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 Photo: mack2happy 14
  • Positive reputation yieldsmeasurable value A company highly regarded by its stakeholders is more likely to enjoy: - Strong brand loyalty - Returning high value customers - Lower employee turnover - Easier recruitment of high-caliber employees - Higher investor confidence - Positive regulatory environment - Lower costs of capitalReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 15
  • The risk: Negative reputation exactsa measurable penalty A company viewed with distrust and outrage by its stakeholders is more likely to suffer: -  Increased customer churn -  Elevated customer acquisition costs -  Higher employee training costs - Regulatory constraints -  Increased cost of capital -  Lower investor confidence -  Increased vulnerability to competitorsReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 16
  • The trajectory of reputational crises Stakeholder experiences Corporate initiatives and messaging Third party conversationsReputare Consulting LLC / What We Can Learn from Seven Stranded Castaways © Reputare Consulting 2011 17
  • Reputation penalty or advantage? BP Stock Price vs. DJIA: 2007-2012Reputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 Chart: Yahoo! Finance 18
  • Reputation penalty or advantage? Apple Stock Price vs. DJIA: 2007-2012Reputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 Chart: Yahoo! Finance 19
  • Why reputation matters to business Based on five factors: Financial stabilityvAccounting conservatism Corporate integrity Transparency Sustainability Provided by Trust Across AmericaReputare Consulting LLC / What We Can Learn from Seven Stranded Castaways © Reputare Consulting 2011 20
  • The resiliency model for reputation Data-driven insight Willingness to Balanced desire engage, act to protect revenue Outside-in AND reputation perspective Enterprise-wide 24 x 7 understanding monitoringReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 21
  • Problem: Major gaps in reputationrisk management for corporations Risk literacy Reputation literacynot on reputation agenda not on risk agendaReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 22
  • Current gaps provide pathway tovalue for the organization•  Help lines of business understand competitive risks – and opportunities – to protect reputation.•  Help shape strategy to address drivers of reputation.•  Quantitatively measure the impact of communications response in a crisis – to improve next time•  Escalate emerging risks to c-suite and board for shift in resources, strategy to mitigate risk•  Elevate the role of risk organizationReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 23
  • How do we manage reputation risk? BCM: ERM: Incorporate Integrate reputation reputation into intelligence, risk agenda mitigation into practicesReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 24
  • Integrating reputation resiliency into ERM Deliverables: • Distinct reputation risk assessment • Set baseline measurement • Integrate reputation into reporting Opportunity: • Define reputation resiliency for organization • Expand view of risk to include non-market, non- operational issues with impact to reputation • Address broader issues of concern to BoardReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 25
  • Business processes: ERM Identify key risks; establish agenda Develop Reputation Monitor; mitigation resiliency report to strategies c-suite for ERM Build risk competency at strategic levelReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 26
  • Outcome of ERM reputation process Quantified reputation risk for the enterprise Build culture of risk literacy Define drivers of risk, prioritiesReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 27
  • Embed reputation intelligence intoBCM governance Risk Assessment (RA) and Business BCM Governance Impact Analysis (BIA) Risk Assessment Business Crisis/Emergency Business Continuity (RA) Continuity/ Management Disaster Recovery Business Impact (BC/DR) Disaster Recovery (CM/EM) Analysis (BIA) (BC/DR)Reputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 28
  • Transformed BCM program BC/DR: Integrate reputation impact analyses into BC planning RA/BIA: CM/EM: Incorporate Enhance plans, quantitative BCM: processes analysis of Reputation to include reputation Resiliency reputation risk impact monitoring Conduct exercises related to reputation risk scenariosReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 29
  • Integrating reputation into BCM Risk Assessment •  Incorporate reputation risks •  Build reputation risk awareness for the business area Business Impact Analysis (BIA) •  Enhance reputation impact analysis •  Provide meaningful reputation data Current approach is only a guess at reputation impacts: Current approach is only a guess at reputation impacts: (1 = Critical, 5 = Low)Reputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 30
  • Integrating reputation into BCM Business Recovery Planning •  Incorporate reputation risks •  Elevate reputation risks within business areas Emergency/Crisis Plans •  Enhance crisis plans to include reputation measures •  Monitor reputation risks dynamically •  Expand EM/CM processes to address non-physical disaster eventsReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 31
  • Integrating reputation into BCM BCM Exercises and Scenario Planning •  Incorporate reputation management •  Expand the scope of BCM exercises to address non-physical disaster events •  Expand training and testing for PR/Comm teams •  Form reputation team within crisis management organizationReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 32
  • Summary: Value of ReputationResiliency to BCM Enhance risk management practices and become reputation champions Provide more quantitative analysis and rigor to set corporate priorities Elevate the value of BCM planning processes by addressing reputation risks Move enterprise to a more secure, resilient stateReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 33
  • The resiliency model for reputation Data-driven insight Willingness to Balanced desire engage, act to protect revenue Outside-in AND reputation perspective Enterprise-wide 24 x 7 understanding monitoringReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 34
  • The ultimate goal of resiliency Strong revenue AND reputationReputare Consulting LLC | DRJ: Reputation Resiliency | March 2012 35
  • Thank you.For a copy of our white paper,please contact:linda.locke@reputareconsulting.comrandall@tillcontinuity.comLinda Locke Randall Till+1 314 435 3428 +1 314-608-7672Twitter: Reputationista