Many families, family offices and family businesses have started to put in place solutions to manage their reputation risk. This is not surprising when you see Deloitte recently found that 87% of executives now rate managing reputation risk as more important than other strategic risks.
So, how can reputation risk monitoring help families enhance and safeguard their reputations?
1. Stop the spread of misinformation
Many reputation crises start from simple misinformation, which is usually innocent enough: a customer, partner or employee misunderstanding something about the company, which is then posted on social media.
Of course, the source may not always be so innocent. In some cases, misinformation may, in fact, be the result of a concerted, orchestrated disinformation campaign perpetrated by a disenfranchised supplier, former employee or competitor.
While this misinformation can flare into a crisis within minutes, it usually takes much longer for the family or company to publish a correction. At this point, the damage is usually already done. According to research from Warwick University it takes, on average, 14 hours for a false claim to be resolved on Twitter. Given the 24-hour news cycle by this time it might have hit the newspapers or TV networks.
The bottom line...
- Reputation risk monitoring ensures inaccuracies don't have the time to gather steam; false statements are picked up under an hour, if not within minutes; and strategies are put in place to correct inaccuracies.
2. Take action to prevent a crisis as early as possible
Crises may also start with families or companies taking ill-advised decisions or making simple, easy-to-understand mistakes. These wrong-sighted decisions usually lead to a rapid, and potentially severe, public or industry backlash, generally starting on social media and fanning out from there into the wider, mainstream media.
Private clients and companies who spot and respond to these issues quickly have the best chance of safeguarding their reputations.
Companies that respond to reputation crises very quickly see little long-term impact on their brands, according to business intelligence firm Clutch, whilst companies that took weeks to respond saw their brands devalued by as much as 50% in the eyes of the public.
The bottom line...
- Reputation risk monitoring enables families to monitor and track the immediate public (and potential media) response to their actions and choices, giving them the time to quickly reassess if needed.
3. Understand what is in the public domain about you
Given the scale of information on the Internet, many private clients and families are completely oblivious to the amount of information on the Internet about them.
This is not only information about their business activities in public databases and filings—such as company, land, yacht and aircraft registries—but also personal information on social media.
In our experience, time and again we have found there is at least one family member, colleague or friend who is posting information and photographs about the family publicly on social media, often without knowing the risk they are loading on the family.
This has become incredibly risky in a world where online news publications and blogs love to include content, such as photographs, from social media. In fact, many newspapers and online publications over the last 5 years added whole new teams to their staff whose job is to source image-led stories from social media.
The bottom line...
- Reputation risk monitoring enables private clients to spot and remove any posts, photographs or videos that have been posted by other family members, friends, colleagues, employees or other people that expose the family to this risk—as well as understand what information is available about them more generally.
4. Understand how reputation is shaped in your industry
Many reputation crises do not start with a mention of a family, family office or family business at all.
They start, instead, with the media writing about a specific trend, such as sustainability, gender pay-gap, or inclusivity, that intersects with the family's business. These trends tend to be very fine-grained when you get to an industry level. For example, in the construction industry, it might be a string of stories about fire safety and regulations.
How business owners and companies respond to these trends ultimately shapes how they and their companies are perceived: on one hand, owners and companies who are seen to be moving in the right direction on these issues see their reputations enhanced. This might mean, for example, taking proactive steps to improve the diversity of representation in their business. While those who are seen to be moving in the wrong direction usually pay in negative coverage and a worsening reputation.
Effective reputation monitoring solutions do not only monitor for mentions of a family and their companies but keep their finger on the pulse of the industries that these businesses operate in more generally, flagging emergent risks and new trends.
The bottom line...
- Reputation risk monitoring enables families to better understand the changing trends within their industry and take intelligent decisions to support their businesses.
5. Understand how to enhance your reputation
As we have seen then, reputation risk monitoring is not only about managing risks. It also gives families and their businesses the insight they need to enhance their reputations.
Strong reputations significantly improve the financial performance of companies. Academic research has found that corporate reputation has a "significant" impact on the financial performance of a business—and that the reputation of the company's leadership and ownership has the most significant impact on its reputation. Understandably, customers, partners and others want to do business with companies that are led and owned by people with good reputations.
Reputation risk monitoring provides not only intelligence on the risks facing a family, but also the themes that are shaping reputation in their industry more generally.
As a result, many families are able to use this strategic intelligence to guide them on where to focus their energy to support and enhance their reputations; that might be sustainability, safety or something else entirely.
The bottom line...
- Reputation risk monitoring provides families with a clear map to plot their journey to a stronger reputation, enabling them to see the topics and issues they might want to take a proactive lead on through action and vocal leadership.
6. Get a temperature check on your risk exposure
Reputation risk monitoring has become necessary because of the huge amount of content on the Internet today: 500 hours of new videos are uploaded to YouTube every minute, 4.3 billion Facebook messages are posted daily, and 6,000 tweets are posted every second.
It has also turned everyone into a publisher: more than 2.75 million posts are published each day on blogging platform WordPress alone.
Even if a family or private client is mentioned very infrequently, the trends that expose the family to reputational risk will be very complex—the result of thousands, and potentially millions, of articles about their industry, competitors, suppliers, and business in general.
At Transmission Private, we know that the power of reputation risk monitoring is in being able to digest all of this information with the latest technology and provide an easy to understand, simple assessment of the risks facing the family.
In fact, we provide our families with a score out of 100 every month that gives them an immediate snapshot of whether they need to worry or not.
The bottom line...
- Reputation risk monitoring enables families to cut through all the noise and get a real-time, straightforward assessment of the reputation risk that they are exposed to.
7. Reassure partners, investors, customers and other stakeholders
If you are thinking about your reputation, you can rest assured you are not the only one. Business partners, investors, suppliers, customers, advisers, bankers, lawyers and everyone else is increasingly sensitive to their exposure to reputation risk.
Social media, the Internet, and growth of online media have made everyone increasingly wary of protecting, safeguarding and enhancing reputations. 78% of executives say they think critically about reputational risk before signing a new deal, transaction or partnership; this has fueled the extreme rise in due diligence spending that we have seen over the last decade, clocking up annual growth in the region of 20% annually.
Putting in place a robust system to manage and monitor reputation risk does not only provide direct benefits to families but to their stakeholders as well. It provides confidence to investors that the potential of a crisis can be managed, reassurance to employees that their companies are doing what they can to build a positive reputation; and it provides partners with the confidence they need to know that they aren't, themselves, going to find themselves exposed to risk as a result of working with a company.
The bottom line...
- Reputation risk monitoring enables families to showcase to current and potential business partners that they are taking their reputation seriously, not only building loyalty and commitment with their existing employees and partners, but give them an edge with new business partners too.
Next: Read about how reputation risk monitoring works for families, family businesses and family offices →
