Reputation is everything for a broker. Here's how to handle yours.
Reputation is everything for a brokerage. How people see you - and how much they trust you - directly affects leads, referrals and your bottom line.
It's something that is continually rated as a top concern for businesses, with Aon’s 2012/13 Australasian Risk Survey naming brand and image as the top risk concern of organisations for the fifth year running, while a survey by insurance group ACE found 81% of companies surveyed consider reputation to be their most significant asset.
Yet it is also one of the most challenging and misunderstood aspects of business, with 92% of businesses naming reputational risk as the most difficult category of risk to manage, and 68% saying advice on risk management is hard to come by.
David Van, founder and managing director of reputational risk management consultancy the De Wintern Group, said there are numerous reasons as to why it has become such a headache for organisations.
“It is a very difficult risk to get your head around. It’s very complex and has attributes that are not like a lot of other risks,” Van told Corporate Risk & Insurance.
Reputation risk can rise internally, externally, upstream or downstream, Van explains, or it can even arise from a competitor doing something wrong.
Reputational risk is a dominating issue for many business owners, but luckily there are a few simple measures that can be taken to avoid a reputation disaster.
Mike Purvis, Managing Director of global consulting firm Protiviti, said there are 10 key factors under five categories to help manage reputation risk:
Strategic Alignment
Strategic alignment with a focus on a sustainable reputation begins at the top with management oversight, strategy-setting, business planning, image building and branding. Under this heading come three important factors to implement:
- Effective management oversight
- Integration of risk into strategy setting and business planning
- Effective communications, image and brand building
Cultural Alignment
To establish a sustainable reputation, cultural alignment can be as important as strategic. A strong culture to manage compliance in a proactive, holistic manner can also contribute to lowering costs, increasing effectiveness and sustaining reputation during times of trouble.
- Strong corporate values, supported by appropriate performance incentives
- Positive culture regarding compliance with laws and regulations
Quality Commitment
Companies with a strong reputation are noted for their commitment to quality, therefore companies committed to quality have a strong discipline to improve continuously.
- Priority focus on positive interactions with key stakeholders
- Quality public reporting
Operational Focus
A strong operational focus is vital to managing reputation risk. “A strong control environment and superior quality time, cost and innovation performance in the marketplace over time contributes significantly to a sustainable reputation,” Purvis said.
- Strong control environment
- Company performance relative to competitors
Organisational Resiliency
A company’s reputation risk management is inextricably linked with the resilience provided by its risk management and crisis management. “Effective identification and management of the company’s risks can identify major threats to reputation and ensure they are reduced to an acceptable level,” Purvis said. “In addition, effective response plans and teams can minimise reputation damage when threatening events occur. Together, these two disciplines are fundamental to managing reputational risk.”
- World-class response to a high profile crisis
Purvis concludes that it is persistent attention to what’s really important that offers the best approach to reducing reputation risk to an acceptable level.
Insurance Group ACE adds the following tips on managing reputation risk:
- Develop an ‘outside-in’ perspective on risk
Apply a ‘reputational lens’ to the key traditional risk categories to understand how damage to reputation may result if they are not properly managed and take steps to close any gaps.
- Place a value on reputational capital
Have experts review the financial impact of various reputational issues and communicate it across the company to drive home the importance of maintaining reputation.
- Monitor reputation across all markets
Actively listen to your main groups of stakeholders on the issues that affect your reputation. Learn to use new tools such as social media to monitor external perceptions.
- Develop a multi-disciplinary approach
You may have expertise in the area, but you should still work with PR experts and other stakeholder-facing business functions to protect and enhance the company’s reputation.
- Learn from others mistakes
Learn the lessons from major corporate reputational disasters take best practices that can adopted from their analysis.
How do you manage reputation in your brokerage? What are some of the key risks? Share your thoughts below.
