Opinion: Using military know-how to reduce your reputational risk

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By Mario Bekes, managing director, Insight Intelligence

Reputational risk, and how to mitigate it, is a frequent topic at the boardroom table. It is a risk which could affect anyone, particularly high profile corporations and government agencies. The impacts are wide ranging including financial loss, lost revenue, increased operating and regulatory costs and most importantly loss of trust from the local community, stakeholders and customers.

Reputation damage is the highest rated risk according to 1,400 risk management professionals in 60 countries (Aon Global Risk Management Survey 2015). Many companies have put significant resources into reputational risk planning and there are large numbers of case studies highlighting both the good and bad in managing reputational issues.

We’ve all heard stories of the consequences of a damaged reputation. One of the most famous being when the CEO, Gerald Ratner of massive UK jewellery retailer, Ratners, called his products “total crap” – wiping GBP500m off the value of his business and bringing it to its knees. On the flip side, Halifax Bank of Scotland’s swiftly deployed its crisis management capabilities when false market rumours regarding liquidity issues at the UK bank caused shares to fall by 17% in just 10 minutes of trading led to a coordinated, global response. It enabled the bank to promptly and unambiguously deny the rumours, with the Bank of England moving to reject speculation of a liquidity crisis and reassure the marketplace. The share price recovered 10% by the end of the day.

There are sound templates available to help companies structure and manage risk issues and at leading commercial investigations firm, Insight Intelligence, we believe there are some keys areas where companies should place particular attention and help can come from a rather surprising source. Namely, military intelligence.

When your reputation spirals out of control, loss of revenue and brand become inevitable. According to a Wharton study, it takes a whopping 80 weeks for stock prices to recover from a sudden price drop^. The instant exchange of information in today’s social media society means managing reputations requires a cool head in times of crisis and some particular skills in deciphering the key information to focus on and how to respond.

Reputations can be diminished or even destroyed by just a few key strokes on social media, whether the original intentions are spiteful or not. The broader public applies little grading and valuation to the source of information, instead that information often becomes the ignition of speculation.
Here is where some military intelligence know-how comes into its own. Counterintelligence operatives are trained in the art of filtering information, determining its importance and developing the most appropriate response. Armed with this knowledge, organisations and high profile individuals are much better equipped to swiftly and effectively respond to a reputational threat.

For example, when you are getting dozens, if not hundreds, of social media comments from various places in the blink of an eye, a well-drilled plan that is executed with precision makes all the difference.

So, what does military intelligence help look like in practice? The following 5 key areas of reputational risk management are all improved by a ‘spy’s eye’:

1. Preparation
Expect the unexpected. Do not wait for crisis to escalate, instead prepare a risk management plan on how to deal with reputational risk and perform regular training with key staff and employees in general. You should aim to include a level of automation so you can deliver the maximum response with minimum impact. Remember, by acting immediately, as in the Halifax Bank of Scotland case, damage can be successfully minimised. Every minute is important, especially at the start of a crisis. Do not wait hours or days.

You probably don’t know when or where something will come from to damage your reputation but you can have your action plan ready to go.

2. Training
Carry out realistic training, something the military do constantly. Real scenario-based training has a massive impact on people’s understanding of the impact an event can have and how a clear, simple plan makes a massive difference. Companies should create a ‘War Room’, real and virtual, which can be fully dedicated, equipped and manned at any time.

3. Monitoring
Every organisation or public figure should develop tools which allow continuous monitoring of internal and external information flows. From this, projections are created on likely issues. Monitoring can be by software, investigative methods, surveillance, marketing surveys as well as building business relationships with social media companies.

4. Counterintelligence
Organise a team within your company which will be able to collect, analyse and disseminate data about reputational risks. The military use what they term an ‘intelligence cycle’ for this structured approach. Employing intelligence collection officers with experience of investigations and human intelligence will add a robust, effective winning edge in controlling information flows.

5. Social Media and Cyber Protection Responsibility
It is important for every company to build, develop and implement stronger policies and procedures to create a safe environment and strengthen IT infrastructure to reduce cyber threats. You need to include a process for regularly checking websites and social media accounts for hacking vulnerability. You also need to make sure you have all the passwords – it is surprising how many firms we see who’s passwords are left in the hands of a single, junior member of staff!

Every crisis situation could affect your reputation. However, every crisis also creates an opportunity to rebound and emerge stronger. Learning from mistakes is an important lesson, but just ask Gerald Ratner whether he would rather have not made his mistake in the first place!

Protecting company reputations is an ongoing task. It is hard but it is achievable. There is no 100% bulletproof system to prevent reputational risk damage, however organising and deploying a professional team of experts, preferably with the involvement of your insurance company, dramatically reduces its impact.

It may sound like something out of a movie script, but the tools and techniques that military intelligence has been honing for years should be harnessed by corporations. The Number One boardroom risk needs to be matched by a Number One response.

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