How can you protect your reputation when something goes wrong?

Risk is something that organisations of all sizes in the utilities sector have to face. Whatever the risk - whether it is related to the health and safety of employees or in handling succession issues - the management of risk is key in order to cement the success of the business.

The risk of physical damage is very tangible – for example, a petroleum giant causing an oil spill – while remedying the fault may be lengthy and costly, it can be more difficult to manage the damage to the firm’s reputation as a result of the accident.

A recent global executive survey on strategic risk published by Deloitte reported that reputation damage was the number one risk concern for business executives around the world, with 88 per cent of respondents stating that they are explicitly focusing on reputation risk as a key business challenge. These have been echoed by Aon’s Global Risk Management Survey 2015, which has placed damage to reputation and brand the number one formidable risk facing companies.

According to a study by the World Economic Forum, on average more than 25 per cent of a company’s market value is directly attributable to its reputation. It is for this reason that owners and senior managers of utilities businesses should make protecting their company’s reputation of paramount importance.

There are several steps that an organisation can take in order to minimise the damage once an incident occurs. First and foremost, they need to ensure there is an effective and tested crisis management plan in place. Such programmes, embedded within the business at all levels, place the company in a better position to manage a crisis head on and provide strategies for dealing with the reputational risks they inevitably create.

Simple strategies like the early appointment of one singe coordinator will avoid misinformation being leaked internally and externally, and create a consistent message and approach to the management of the event.

Swift and decisive action is also essential. Being seen to move quickly to address the situation as well as keeping all stakeholders well informed will help protect the company’s reputation and brand. This exercise was performed particularly well by Merlin Entertainments in the days following the roller coaster incident, with the CEO of the group addressing the press, stating that he was not concerned about the share price, just the individuals involved in the crash.

The early appointment of a solicitor to advise the business will help to protect documentation and the investigation process by legal privilege.

Whereas reactive handling of an incident is one aspect, utilities organisations big and small should ideally have in place a robust risk management strategy that anticipates and covers all forms of potential crisis or breach.

This could involve running statistical and behavioural analysis to identify any potential weak points, understanding which parts of their organisation require review and additional support, designing an incident response plan, considering the worst case scenario, performing best practice analysis and making business continuity plans. Also, performing mock scenarios will identify any shortcomings and help ensure they have the correct procedures in place.

Once the dust has settled, all organisations should take time to reflect and review their handling of the event and take stock of any lessons learned to implement improvements to systems and infrastructure.

Helen Devery, partner at risk and insurance law firm BLM