Authors

Niri Shanmuganathan

Partner

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Timothy Pinto

Senior counsel

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Michael Yates

Senior associate

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Tim Strong

Partner

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Tandeep Minhas

Partner

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Katie Chandler

Partner

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Roland Mallinson

Partner

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Anna McCaffrey

Senior counsel

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Andi Terziu

Associate

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Authors

Niri Shanmuganathan

Partner

Read More

Timothy Pinto

Senior counsel

Read More

Michael Yates

Senior associate

Read More

Tim Strong

Partner

Read More

Tandeep Minhas

Partner

Read More

Katie Chandler

Partner

Read More

Roland Mallinson

Partner

Read More

Anna McCaffrey

Senior counsel

Read More

Andi Terziu

Associate

Read More

7 October 2020

Protecting corporate reputation in the age of volatility – Five things you need to know

  • Quick read

These truly are uncertain times. COVID-19 has tragically caused the deaths of over 1 million people worldwide and triggered unprecedented disruption to the world economy.

Meanwhile, some democracies have become politically volatile and have played host to widespread protests addressing a range of fundamentally important issues such as Black Lives Matter, Civil Liberties and Climate Change. In the UK, Brexit has become bitterly divisive.

So, what are the specific reputation risks to your business in this new age of volatility and what are the five things you need to know now to help protect your corporate reputation?

The risk of corporate spiral

Pre-COVID, the increasing number and changing nature of threats to corporate reputation was already apparent. Adverse media was no longer the only source. Anyone with a phone can be a critic or a campaigner, their opinions amplified via social media. Cyberattacks and product safety issues have become front page news and can trigger litigation or regulatory intervention. Poor internal governance can end in a very public investigation. Aggrieved employees, shareholder activists or competitors can hurt a corporate brand.

However, 2020 has created a more dangerous terrain for businesses, which have had to respond and adapt, and have more to lose. It's also even more important to avoid a damaging story because – in a climate where people are angry and suffering – the media provides targets for that outlet when corporate behaviour is questioned. The court of public opinion is now more likely to call out what it sees – and loudly.

This is magnified through a multi-layered media. In the press, an issue is reported on by both sides of what has become a polarized anger-prism. Momentum on an issue can then gather pace, fueling the 24-hour news cycle. In parallel, social media allows anyone (often under the cloak of anonymity) to attack or judge, sometimes resulting in trends, viral exposure or online campaigns or petitions.

The resulting heat can then catch the attention of stakeholders, brand ambassadors, sponsors, shareholders and employees who become keen to run from the noise, some of whom comment themselves on social media or try and "cancel". Customers can boycott you. Competitors can try and strike to take advantage. A prolonged crisis can also trigger the interest of international media, regulators and even government.

Failure to pre-empt, plan for or mitigate a crisis before the corporate spiral can ultimately destroy your business. So, what do you need to know now?

Five things you need to know to protect corporate reputation

While every crisis (including buildup and aftermath) is different, there are salient principles to help protect your corporate reputation:

1. Get your specialist external advisors in place early

Time is of the essence because the media often provides little time for comment before the publication of a story. Making key decisions without external advisors (usually PR and media law specialists) already in place who understand your business and the issues can make things worse. Use a law firm with broad experience of your industry to avoid siloed advice. Always have mobile numbers to hand.

2. Control key underlying areas of risk before they become a crisis

From experience, we have identified seven key areas of risk which, if left unmanaged, can create a corporate reputation crisis:

  • investigations
  • people
  • safety
  • activism
  • cyber
  • brand 
  • media.

See our videos for each area summarising prevention and crisis management strategies and our brochure for more detail. Get ahead of a story by anticipating the risks well in advance and dealing with the underlying issues which can create one. Plan ahead of reputational events, such as succession, acquisitions, investigations, shareholder activism, hiring, firing and floating.

3. The best time to influence a story is before publication or broadcast

If the media threaten to publish or broadcast false information (which can then spread and mutate), engage head on to explain why the media have got it wrong and the damage they will cause. Making these legal or regulatory risks clear beforehand will apply pressure and could lead to a story being stopped or balanced more fairly by incorporating your side. If there's a risk of confidential information being published, consider all possible remedies, such as an injunction.

4. Aggression is not always best

Many of the reputational challenges which companies face will often involve delicate and complicated scenarios. When challenged by the media, the instinctive, natural reaction can be to fight back as aggressively as possible. However, too many times before, the legal approach taken has become "the story" or has created an unmovable obstacle, leaving litigation as the only option. Understanding the right approach is as important as understanding the law. Consider a more subtle or collaborative approach when appropriate. 

5. Reputation is a two-way street

The actions of key individuals have an ability to damage the reputation of the company, and vice versa. Always consider the affect that the other's reputational vulnerabilities will have. For example, a CEO's openly visible lifestyle (via public, family Facebook accounts) personal views (expressed on Twitter) or exposed private life can rebound back upon the company, so protecting key people is key to protecting the business and its reputation. Always consider the separate rights available to individuals (such as privacy or data rights) in order to protect both sides. Equally, plan exit routes from endorsements to limit any damage by association.

Here to help

To discuss the reputation risks covered in this article, please contact a member of our Reputation Management and Privacy Protection team.

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