Navigating Crisis and Reputation Risk in 2021
Argyle SVP Robert Gemmill shares his insights on crisis and reputation risk with GAM Graphics and Marketing magazine.

Earlier this spring, Robert Gemmill, Senior Vice President and General Manager in Washington, DC, shares how organizations can face the unique challenges in crisis communications this year. This article originally appeared in GAM|MAG.

Assessing the Current Landscape

As Johnny Cash sang, “Bad news travels like wildfire,” and never has this been more the case. Ever-increasing public and media scrutiny of actions and behavior, together with a related demand for greater transparency across-the-board, have considerably elevated the reputational risk facing companies. A company’s response (or lack thereof) to a reputational issue is often condemned in the court of public opinion in less than 24 hours. Social media magnifies this by providing platforms that amplify, echo, and unite disgruntled voices, galvanizing around a cause or objective, potentially exposing a company to serious risk or even existential crisis. When this happens, and a company is forced to react to external circumstances only, it may be too late to minimize risk or save a reputation.

Being caught unprepared or unresponsive to a situation can do irreparable harm to one’s reputation or bottom line. Significant research studies support this. In 2012, a well-known Deloitte study, citing the World Economic Forum, estimated that more than 25% of a company’s market value is directly attributable to the organization’s reputation. More than eight years later, we have many more data points to assess how much of a typical company’s market value flows from its reputation. According to Global Finance, citing a recent global survey of 2,000 executives, that number had climbed to 63% in 2019.

While we don’t know how much higher that number climbed due to COVID-19 and the events of 2020, we do know that companies must do more to build reputation resilience to insulate themselves from that risk. Companies and boards should anticipate reputational risks before they metastasize. Active stewardship of corporate reputation requires vigilance, commitment, and a stakeholder-facing mindset.

Being prepared has never been more critical than it is today: a new administration in the White House, a changing regulatory environment, continued uncertainty surrounding COVID-19, increasing corporate litigation, and evolving data and privacy considerations are just some of the larger trends facing corporate reputations today. Maintaining public confidence and trust on issues involving financial and non-financial assets is essential. If done well, we can prevent crises that will materially devalue both.

Anticipating Reputational Risk

It is wise to build reputational risk resilience while a company is still in “peacetime” (i.e., long before an issue emerges). The company proactively protecting its market position by adopting a readiness posture for qualitative (unknown) and quantitative (measurable) risks is better prepared to effectively address the challenge. While not applicable to every situation, there are several concrete actions a company can take now, including:

Coordinate communications efforts across the company. Communications shouldn’t operate in a silo. Issues that pose a reputational risk aren’t necessarily restricted to a communications problem. Coordination with legal, operations, finance, human resources, and other vital teams is necessary to ensure a communications strategy aligns with the overarching goals and enterprise risks facing a company as a whole. It is essential that communications complements, not complicates, the legal strategy, especially as it pertains to matters involving potential legal liability.

Conduct an objective assessment of your reputational profile. Before drafting messaging or deriving a comprehensive strategy, it is imperative to understand your relationships with stakeholders. Are there existing friendly media relationships, or is it necessary to build a profile from scratch? Where are your relationships weaker? Are there influencers in your industry who will support your company if needed? Who would take the opposing side, and why? From this, a strategic external and internal communications plan can be created to strengthen relationships, build more concrete brand awareness, and be in a position to quickly rebuke misinformation when necessary – all with a focus on crucial audiences: employees, clients, prospects, and third-parties.

Tell a compelling story. Too often, the first time consumers hear about a company is concerning an unfavorable report. One way to combat this is to ensure your proactive communications convey the right narrative. What are the company’s values, mission, goals, and ambitions? How does the company solve a unique problem? Reviewing (or creating) corporate messaging and ensuring consistency in all initiatives – both internal and public-facing – is an essential step to building reputational resilience.

Plan for likely scenarios. Work with communications, legal, and business operations to identify potential issues, upcoming milestones, and events that could pose a risk (even good news announcements). From there, it is essential to build out a suite of proactive materials, such as Q&A, key talking points, the company’s approach if a scenario comes to fruition, and more tailored strategies for critical audiences. But having messaging in place is not enough – what are the escalation points that will activate specific responses? Does every team member know what role to play in the event of a real crisis, such as a data breach? Having a scenario plan and rapid response protocol in place will significantly reduce the anxiety related to a potential crisis and allow key members of the company to know their responsibilities regarding activation.

Prepare spokespeople in advance. Identifying the right spokespeople isn’t as easy an exercise as it sounds. In many cases, this will be the CEO – but there are often times when having the CEO speak on the company’s behalf gives an issue more credibility than it deserves. Generally, the company spokesperson’s management level should coincide with its problem. For this reason, it is prudent to train multiple spokespeople to ensure effective delivery and that key messages are being conveyed consistently.

Monitor media and online sources. Staying abreast of your industry as reported in the mainstream press is an essential step in preparing for the unexpected. An efficient media monitoring procedure helps to stay abreast of news trends and issues. The monitoring should also include Google search trends, broadcast and online coverage – including social media – and capture what is being said/searched, by whom, and where attention may be shifting. This advance monitoring is often the difference between sufficient preparation and being caught flat-footed.

Embrace media relations. An essential portion of building reputation resilience is to become the trusted and open source of information with reporters who will be covering your company. This builds trust – even if the company simply provides background information (off the record) that helps a reporter write about key issues in your industry. Doing so will allow reporters to feel comfortable with the information you provide and see the company and its executives as a valuable source of commentary for both
on and off the record inquiries. While this process certainly helps identify favorable reporters who are receptive to telling your side of the story, it also prepares the company to accurately convey its position when faced with an unfavorable circumstance.

Mitigating Crisis

Of course, taking the necessary steps to prepare for a potential crisis does not mean total avoidance. A crisis is when a company’s actions do not meet stakeholder expectations. At some point, most companies face an issue that rises to the level of a real crisis, putting their brand and reputational equity in danger. If handled correctly, it could be an opportunity for a company to strengthen trust, build loyalty to the brand, and showcase its values to employees. When assessing a potential crisis, the following are excellent rules to guide a company’s approach.

  1. Does the preparatory process you have in place apply to the scenario at hand? If so, the company should already have a broad strategy to activate quickly.
  2. Tell the story yourself, if at all possible. Sometimes, a media story will inevitably catch a company off guard. Suppose a company is aware of a situation that likely will result in a negative report. It almost always benefits the company to frame the issue itself before others can frame it for the company. The only caveat here is involving sensitive legal matters – having a communications team who understands legal considerations helps balance the need to communicate with the need to protect the company from potential liabilities.
  3. Establish a fact-finding process. If you are the most credible public source of facts, most stories will include those facts in the coverage. What do you know, what do we need to learn, and how can we convey accurate information while reducing the possibility of public misinformation?
  4. Do not over-explain. Leading with the positive (i.e., what the company supports) instead of leading with what the company is not is essential. This will help maintain trust with customers and successfully position the company for business after the crisis subsides.
  5. Support key messages and talking points with facts, data points, and third-party support. In 2021, flowery language and a promise to do better is no longer enough. What actions is the company taking to support its claims? What statistics support the company’s narrative?
  6. Always prioritize employee engagement. Especially after a year that saw massive workforce reductions, restructurings, and bankruptcies, internal constituencies are more critical than ever. Employees can be a company’s greatest ally and are a reflection of your corporate culture. Ensuring transparency and engagement with them amid challenging circumstances can make all the difference in successfully mitigating the crisis.
  7. Recognize that crises seldom go as planned. Even with careful scenario planning, message preparation, and training, there will always be a curveball. Be prepared to adjust on a dime and don’t overreact to an emotionally charged situation. Companies and executives who remain even-keeled, transparent, and poised through challenges earn significant long-term trust from their employees and customers.

About the Author

Robert Gemmill is an attorney specializing in reputational risk resilience, crisis management, and litigation communications. He oversees the Washington, DC office of Argyle, an industry leader in public relations and communications for both companies large and small. Argyle’s Reputation Risk practice in Washington, D.C. is a specialty service that gives clients a competitive advantage in actively protecting their most valuable asset: their reputation.

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