To paraphrase Amazon founder Jeff Bezos, your reputation is what people say about you when you’re not in the room. Reputational risk has never been more critical. As lockdowns ease and businesses look to start their return to normal, the green shoots of economic recovery seem to be appearing. Job vacancy numbers were the highest for a year in February to April, with 657,000 open positions. And house prices have climbed at their fastest rate since the credit crunch, with some demand driven by the Stamp Duty break which lasts until the end of June 2021. But however positive the outlook, risks persist. We have been working with a range of organisations to create modern risk frameworks fit for the new business environment. The key to agility in this area is not wholesale change – the world, your business and its customers are changing too quickly to sweep away your existing frameworks and start again. You need to keep it simple.
What’s most important about risk right nowManaging risks in the even-more dynamic and fast-paced world in which we’re currently operating isn’t about the minutiae of your plans. It’s about how you, your board, your executive and teams hold and manage the narrative around risk. And the big secret about successful reputational risk management? It all hinges on trust. In thevaluecircle language, managing risk is more about the dynamics than the mechanics; more about the people involved than the processes.
The risk spectrumFrom business as usual (BAU) at one end, to a crisis threatening your organisation’s very existence at the other, all risk sits on a spectrum. Organisations must identify which risk goes where and have regularly tested plans to deal with each type. The four categories on the risk spectrum we’ve developed to use with clients are:
- Business as usual – run-of-the-mill kind of risks which need dealing with operationally
- Idiosyncratic – usually particular to a small part of the organisation or could emerge from societal issues which affect many organisations
- Emerging crisis – teetering on the edge of something needing a full-blown organisational response. These need swift action to mobilise and contain (where possible)
- Existential – a threat to the very existence of your organisation