This document discusses corporate reputation as both an opportunity and a risk for companies. It begins by distinguishing between a company's brand, which is defined and controlled by the company, and its reputation, which is defined by external stakeholders based on their experiences and perceptions. A good reputation can provide competitive advantages like trust and loyalty, while a poor reputation poses business risks. The document then examines different stakeholder groups and the factors that influence how they view a company's reputation. It identifies 10 key components that shape overall reputation and provides examples of reputation crises at companies like Carnival and Menu Foods. Finally, it discusses the challenges of managing reputational risk and the responsibilities of corporate boards to oversee reputation.

1. Corporate Reputation:
Opportunity and Risk
Presented by:
David Weiner
Senior Partner (Retired)
NATIONAL Public Relations

2. Agenda

4. Confused definitions
• Image – Identity – Brand
• What’s the difference between brand and
reputation?
• Brand is what you say about yourself
- What message is being sent?
- You are in control
• Reputation is what others believe about
you
- What message is being heard?
- Market is in control

5. Corporate Reputation
A potential competitive advantage
or
A potential business risk

6. A Competitive Advantage
• A corporate asset – Brand value -
differentiator
• Environment conducive to corporate
goals
• Builds public trust – confidence - loyalty
• Mitigates impact of adverse events
• Enhances deal-making capacity
• Premium on share price
• “Social license to operate”

7. Many Reputations
• Stakeholders define reputation based
on:
– Their values
– Nature of their relationship/interaction with
the firm
– Region or geography
• Metrics change over time

8. Many Reputations
Employees
Good work environment
√ Motivated, committed to success
√ Attract top talent
Customers
Quality well-priced products
√ Recommend to others
√ Loyalty
Investors
Financial performance
√ Sustainable P/E multiple

9. Many Reputations
Media
Accessibility
√ Fair representation
Supplier
Fair payer
√ Favorable terms
Government
Responsible
√ Voice in public policy

10. 10 Components of Reputation
• Ethical: behaves ethically, is admirable, worthy of
respect, trustworthy.
• Employees/workplace: has talented employees,
treats its people well, an appealing workplace.
• Financial performance: financially strong, record
of profitability, growth prospects.
• Leadership: a leader rather than a follower,
innovative.
• Management: well managed, clear vision.

11. 10 Components of Reputation
• Social responsibility: recognizes social
responsibilities, supports good causes.
• Customer focus: cares about customers.
• Quality: offers high quality products and
services.
• Reliability: stands behind products, consistent
service.
• Emotional appeal: I feel good about it, is kind,
is fun.

12. Corporate Reputations

13. What’s Changed
• Reach, immediacy of social media
• Erosion of public trust
• Greater scrutiny of business
• Economic crisis
• Power of NGOs
• Reputation goes beyond “PR spin”
• Operational changes
• Insight into root causes
• Measure and modify

14. Managing Reputational Risk:
The Challenge
• Definition - Amorphous concept
• Cause or effect?
• Not captured in enterprise risk mapping
• “Deal maker” or “deal breaker”?
• By-product of business/operational risk
• Reputation/reality gap
• Role/responsibility of directors

15. Carnival Corporation
“Carnival, Royal Caribbean shares sink on
disaster”
– Reuters, January 17, 2012

16. Menu Foods
“Pet food maker Menu Foods to be acquired by
Simmons Pet Food for $239 million”
- Canadian Press – August 9, 2010

17. BP 2010 – Part I
Explosion in Gulf of Mexico

18. BP 2010 – Part II
$20-Billion recovery fund

19. Directors’ Responsibilities
• Corporate reputation oversight
• Define role of reputation in enterprise
• Establish “appetite for risk”
• Ensure appropriate stakeholder prioritization
against reputation metrics, corporate goals
• How to anticipate major triggering events?
• What techniques are used to assess likelihood
and impact
• What strategies to mitigate their effects?
• Understand nature of reputation in enterprise-
wide risk

20. A Board Responsibility:
The Unilever Approach
Public Policy and Corporate Reputation
Committee
“…appointed by the Board of Directors of AT&T
Inc. to assist the Board in its oversight of
policies related to protecting the Company’s
reputation, including its public policy positions,
social responsibility efforts and the Company’s
brands.”

21. A Board Responsibility: AT&T
Public Policy and Corporate Reputation
Committee
“…appointed by the Board of Directors of AT&T
Inc. to assist the Board in its oversight of
policies related to protecting the Company’s
reputation, including its public policy positions,
social responsibility efforts and the Company’s
brands.”

22. Case Study

23. BP: The Controversy
• Texas City refinery disaster
• 15 deaths, 180 injuries
• Prudhoe Bay Shutdown
• Corroded pipeline
• Prudhoe Bay
• Methanol spill
• Canadian oil sands
• CO2 emissions
• Baku-Tbilisi-Ceyhan pipeline
• Human rights, environment, safety
• Columbian pipeline
• Paramilitary
• Mist mountain project

24. “Beyond Petroleum” or
• Beyond Pompous
• Beyond Pretension
• Beyond Platitudes
• Beyond Posturing
• Beyond Presumptuous
• Beyond Propaganda

25. 2010