Global Center for Corporate Governance Reputational risk Michael Rossen, Director, Deloitte Touche Tohmatsu Limited May 2015
Video: A day like any other 2 2015. For information, contact Deloitte Touche Tohmatsu Limited.
What happens when crisis hits! 3 2015. For information, contact Deloitte Touche Tohmatsu Limited.
Case study: U.S. Creamery The crisis: Deadly listeria outbreak The response: Plant closures Product recall CEO video Memo to retailers Implementation of new procedures: Employees shoes now cleansed All new products will be tested before being shipped Additional processes to be implemented 4 2015. For information, contact Deloitte Touche Tohmatsu Limited.
The outcome I love [company]. The flavors are amazing and so much fun I am proud of them for being proactive, taking responsibility and recalling their products. I can t wait to buy their ice cream again when it is back on the shelves, Customer I don t think the media quite understands the emotional attachment Texans feel for #[company]. Twitter user It s just so so so sad about #[company], I hope they can find a way to survive this. Twitter user Then the cumulative crisis 5 2015. For information, contact Deloitte Touche Tohmatsu Limited.
Reputation@Risk: What executives are saying about reputation risk A global survey conducted by Forbes Insights on behalf of Deloitte (2014) involving 300-plus executives: 87% rated reputation risk as more important or much more important relative to other strategic risks 88% said their companies are explicitly focusing on reputation risk as a key business challenge Key impact areas reported by companies that had previously experienced a negative reputation event included: Loss of revenue (41%) Loss of brand value (41%) Regulatory investigations (37%) 73% of the executives surveyed said their board was involved or very involved in helping to oversee risks to the company s reputation 14% said the board had primary responsibility for reputation risk 6 2015. For information, contact Deloitte Touche Tohmatsu Limited.
Hidden reputation risks There are reputational impacts in areas such as: Financial performance Quality Ethics and integrity Crisis response Safety Corporate social responsibility Security 7 2015. For information, contact Deloitte Touche Tohmatsu Limited.
Boards can take action to confront reputation risk Some actions boards can encourage their companies to adopt to avoid being blindsided by reputational risk: Clarify the link between reputation risk and other risks Ask the right questions Where to look? What to analyze? How to move forward? Develop robust capabilities for monitoring and managing reputation risk Proactively manage reputation risk Invest in risk-sensing technologies Real time analysis Text analytics Big data Forward-looking and outward-facing view Early warnings and triggers Actionable insights 8 2015. For information, contact Deloitte Touche Tohmatsu Limited.
Five lessons for the board 1. Do not wait until a crisis hits to get ready 2. Every decision during a major crisis can affect stakeholder value 3. Response times should be in minutes, not hours or days 4. The business can emerge stronger 5. A crisis is never over until it is over 9 2015. For information, contact Deloitte Touche Tohmatsu Limited.
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