A reputational crisis can wipe out tens of millions of Rands from a company’s value. writes CHRISTELLE MARAIS, practice leader of enterprise risk management at Marsh Africa
According to a study by the World Economic Forum, an average of more than 25 percent of a company’s market value is directly attributable to its reputation. This means that a reputational crisis can wipe out tens of millions of Rands from a company’s value. This risk has increased because the rise of online and social media means crises are now less predictable, can occur faster and with a more drastic impact.
Companies are aware of the potential dangers that could negatively affect their reputations, but never have those dangers been as pervasive and immediate as they are right now.
As organisations strive to upskill their workforces and encourage responsible decision-making at all levels, the risk of immediate publication, financial flows and business impact increase with the use of technology, even if such activities are executed in good faith. This is why business leaders need to understand the importance of their companies’ reputations. From an employment perspective, organisations with strong positive reputations attract and retain better skills and are therefore perceived as providing more value, which allows them to charge a premium for their products and services. They also attract a more loyal customer base that is open to a wider variety of products and services from the firm.
Enabled by transformation and growth in the internet and mobile communications systems, global economic activity has grown exponentially over the last few decades. However, companies, and in turn brands, are constantly vulnerable to reputational risks that can arise from virtually anywhere, be it factors as diverse as product quality, social media, environmental impact, employee malpractice and outsourcing. Reputational risk has now become a potential threat on par with new competition, technology failures, talent issues and changing regulations.
Yet, there are still organisations that do not consider reputation management until disaster strikes. The job of managing reputations in general is mostly done when the company’s reputation has been affected negatively. Dealing with threats to your organisation’s reputation once it has already surfaced is crisis management, a reactive approach aimed at limiting damage, not risk management in terms of reputation.
Perhaps the greatest risk worth noting is the reputational risk in the age of social media. Before the advent of social media, the focus remained on risk avoidance or minimising asset or financial losses. Today, with over half of the world’s population connected to the Internet, companies need to relate enterprise reputation matters to strategic outcomes. In a world increasingly influenced by social media and instant global communications, managing customer expectations and perceptions is critical to success.
The use of social media by organisations to communicate its goods and services is augmented by the need for modern society to connect with the organisations they purchase from. At Marsh we offer risk management maturity and risk management culture surveys and implementation plans, informed by an organisation’s life-cycle position and its future aspirations. With effective support from organisations, these programmes align employee behaviour with strategy, organisational performance and risk management objectives, thereby empowering employees to make the right decisions when it comes to executing operational and financial activities as well as to communicate responsibly about their organisations.
Warren Buffett famously said that “it takes 20 years to build a reputation and five minutes to ruin it”. It’s no wonder that reputation is commonly referred to as a company’s most valuable asset. Reputation is not simply about a balance sheet, service offerings, social responsibility, or even corporate communications, marketing, and public relations – reputation is all of these and more.
Well embedded risk management and continuity management processes will prepare organisations to respond effectively in the limited time available to respond.
Win a Poster Heater with Gadget and Takealot.com
This winter Gadget and Takealot.com are giving away three Poster Heaters, which look like posters but become heaters when you plug them in.
Three Gadget readers will each win a unit, valued at R550 each. To enter, follow @GadgetZA and @Takealot on Twitter and tell us on the @GadgetZA account how many Watts the heater consumes.
What’s the big deal about these heaters? Many of us are struggling to keep the balance between soaring electricity costs and the need to keep warm this winter.
However, the recently launched Poster Heater by EasyHeat and distributed in South Africa by Takealot.com is not only one of the most cost effective electric heaters currently on the market, it is also easy to setup and use.
As the name indicates, it is a poster similar to one you would hang on a wall. But, plug it in and it turns into a 300 Watt heater. The Poster Heater isn’t designed to heat hallways or large rooms, but rather smaller ones like a bedroom or a baby’s nursery or a dressing room.
It uses radiant heating, which means that it heats up in a couple of minutes and the heat is directed at the objects or people around it, quickly taking the chill out of the air and providing a comfortable ambient temperature.
The other advantage of radiant heating is that it doesn’t dry out the air like infrared or gas heaters. Users also don’t have to worry about their children or pets getting too close to it because, even though it gets hot, it can be touched.
To enter the competition follow the steps below:
Competition entry details:
3. The competition closes on 31 July 2018.
4. Winners will be notified via Twitter on 1 August and Takealot.com will be in touch to organise delivery.
5. The competition is only open to South African residents.
Deezer to host Hotstix’s Mandela tribute playlist
Deezer is celebrating Nelson Mandela on the centenary of his birthday by hosting a tribute playlist created by music legend Sipho “Hotstix” Mabuse.
Mabuse, a legendary figure in African music, first rose to prominence in the 1970s with his band Harari and later developed a name for himself as a solo artist. One of his best known songs was the global hit BurnOut in the 1980s.
The playlist takes the listener on a captivating musical journey through the life of Nelson Mandela. It was compiled by Mabuse, who consulted with Mandela’s family and friends to ensure that the music would be relevant and accurate. The playlist also features commentary by Mabuse, which was recorded in his Soweto home.
“I have tried to tell the story of the music that Madiba loved,” says Mabuse. “The Playlist excludes the time in prison obviously, as Madiba would not have had exposure to music in that time. We have focused on the music we know he loved before and after that period. This recording was really an emotional journey for me, but an incredible opportunity to document these memories.”
The playlist features the music the young Mandela loved, such as The Manhattan Brothers, Solomon Linda, Brenda Fassie and Miriam Makeba. It includes struggle songs from Chicco, Johnny Clegg, Hugh Masekela and Yvonne Chaka Chaka. The playlist also includes Mandela by Zahara, one of the younger artists who caught Madiba’s ear.
Mabuse also offers stories of his own songs, such as Shikisha, a song greatly beloved by the former President.
“I was delighted to share my thoughts and hope the listeners enjoyed the musical journey,” says Mabuse. “Madiba did enjoy music immensely and we all have a purpose wherever we are in the world to celebrate culture and to learn from different cultures and music forms and styles.”
This playlist was inspired by the Nelson Mandela 100 campaign, calling on corporates and individuals to act as sources of inspiration and engage in conversation and action.