Your organization’s digital presence is becoming as important as your physical one, and online perception is a metric consumers and businesses use to make decisions. In fact, 68% of consumers form an opinion on a product or service after reading fewer than six reviews. Data is being created in massive amounts and information moves at a frenetic pace. An estimated 1.7MB of data will be created per second per person by the year 2020. With all the ways people have to communicate quickly, it is easy to see how one unfavorable review, negative news story, or viral post can cause major reputational harm to a business. This is particularly true when the information being shared is irrelevant or incorrect.
Businesses large and small have been affected by negative social media posts ranging from hacked accounts to floods of poor reviews following a public news story. Organizations can become entangled in a digital downfall not of their own making but simply by being connected to an incident that has made the rounds on social media. Information may also be taken out of context and repeated by news media. This often occurs when there is not enough validated information, or a situation is unfolding in real time. It takes an average of 12 hours from the start of the spread of false information to when it is corrected. False information has staying power, existing alongside corrections and sometimes even drowning them out.
How Engagement Affects Perception
In our current social media structure, clicks are king. People are more likely to read or engage with content that has a high rate of engagement. Algorithms are programmed to translate engagement into interest, displaying the story or post to more users. As social media algorithms learn about the preferences of their users, a person may be shown the same information from many sources, making it appear legitimate. This poses an enormous risk to an organization’s reputation. Stories are more difficult to correct or refute the longer they exist, and false or misleading information has a long survival rate.
Measuring the Effects of Reputational Harm
It is difficult to measure the impact to a brand or reputation, though it is arguably one of the most valuable assets. Stock prices, quarterly earnings, or other financial measurements are often used to determine the reputational damage. It is estimated that a company could lose up to 30% of its value depending on how the aftermath of a crisis is handled.
Creating a Risk Framework
Reputational risk analysis must be built into an organization’s risk framework, and it must evolve as fast as the technology does. Employees from every level should be involved in the decision-making process to create a robust risk assessment. Monitoring social media accounts and internet traffic is a start, but it is not enough. The risk framework must include plans and policies on how to react to, manage, and remedy reputational risk events before they arise. Simulate and rehearse possible scenarios with your team and determine how to keep open communication with your audiences. Don’t forget to assess relationships within your supply chain, as negative events outside your organization could impact your business.
There are many tools an organization can use to get ahead of the ever-changing digital landscape. Data analytics can show trends and help you determine how to manage reputational risks. Many regulatory bodies offer best practices for social media compliance and to avoid legal snags. Social listening, such as Google alerts and other tools, monitor what others are saying and sharing about your organization. Proactive efforts and forward-focused research and analysis will put your organization on a path to protecting your reputation and brand.
If you would like to address reputational risk with your team, check out our Marco Programs. Contact us today to get started!