While South Florida enjoys many advantages, there are vulnerabilities that come with being a world-class, international metropolis situated at the end of a peninsula. Most businesses are prepared for familiar weather-associated threats like hurricanes, but a recently released report by Bank of America points to a troubling statistic suggesting businesses owners are exposed to a threat of a different kind.
The spring 2019 Bank of America Business Advantage Small Business Owner Report finds that, while most South Florida entrepreneurs have plans to protect their business from natural disasters and cyber breach, a whopping 60 percent do not have a plan to address reputation-oriented crises or challenges.
This creates significant potential for negative business impacts from unforeseen and uncontrolled factors. In reality, reputational challenges are far more common and frequent than large-scale weather or technology-related issues.
It is critical that South Florida business leaders look beyond hurricanes and technology issues when thinking about a crisis.
A risk of this type involves the potential for a negative impact to the social capital of a company, and although social capital is still not commonly measured or quantified, it should be. Its gain or loss has wide-ranging impacts that include stakeholder confidence, revenue, market share, increased costs, regulatory oversight, and employee recruitment and retention.
Planning for reputation risk is complicated by the fact that issues can arise in almost any area, including employee wrongdoing or negligence, legal action, social media activity, customer complaints, and external factors such as crime, economic environment, and activist campaigns. That said, it need not be an overly burdensome process and can be integrated into existing business processes and planning.
To best protect the reputation of an organization, South Florida’s business leaders must consider expanding their business contingency plans to include key steps such as the ones below.
- Risk management should be embedded as part of regular strategy and planning activity. Every department and group have a responsibility to spend time considering areas of vulnerability, identifying early warning signs, and suggesting ways to mitigate the risk.
- A response plan centered around a central “command and control” structure should be created to provide rapid response when issues arise. In many cases, speed of response is the most critical factor in containing and controlling a potentially impactful situation. This also necessitates training among the response team to ensure smooth and seamless engagement when necessary.
- A proactive communications program will build goodwill that is useful in times of organizational stress. Ongoing positive communications with all stakeholders are critical to establish a level of trust prior to a crisis occurring. This includes focusing on customer service quality and responsiveness, operational transparency, vendor and supply chain management, and best-practice governance and thought leadership.
With a few key steps, business leaders can do much to ensure they are as prepared for ongoing reputational risk as they are for the occasional hurricane.
NOTE: Bank of America is a client of rbb Communications.