Management of Brand Reputation: a Critical Risks Approach for Board Members
Like any threat to a company, the management of reputational risks relating to the company's brands must be audited by the board members according to the report of the CEO, the CFO and the CRO (when exists) and deferred to the board.
The huge scope of the possible risks managed according to environmental, social, health and safety strategies and any other thematic related to the ethical expectations of the market (animal welfare, freefrom, etc.) does not necessarily allow board members to easily formulate a detailed opinion, but the risk management strategies proposed by specialists such as Enterprise Risk Management (ERM) at Columbia University can greatly contribute to improving the performance of the company and the operational teams in this area.
5 first-level questions must be asked by the board.
Can society be accused of arrogance?
A few years ago a quality manager of a large manufacturer of diapers and tissues told the young quality manager of a poultry company that I was: “I do not have any problems and I wonder how you can sleep at night with all the risks in the meat industry”. Since then the REACH regulations and the concerns about toxic, carcinogenic, reprotoxic or mutagenic substances in baby diapers have arrived!
Overconfidence can lead to ignoring real emerging risks by hiding behind the company's good reputation, the reputation of its brands and the absence of major previous crisis.
It is essential for the company to investigate its weaknesses.
What does the competition do? Have we read their CSR reports? What do social or environmental activists say? Are there any alerts on our ecosystem (partners, suppliers, certification programs)? Are we on the right track of expectations in foreign markets (foreign regulations, customs and local sensitivities?)
At best those weaknesses can lead to managing a badly prepared crisis at the worst one will end up in addition to a charge of fraud or green (social, health…)washing if the society has too communicated by excess of confidence.
Advice: Challenge your teams, search weaknesses, anticipate trends and think "in three years" not "tomorrow"
Are brand reputation issues trusted by never challenged internal gurus?
Twenty years ago I helped my company to justify the presence of animal meal in the poultry feed on the pretext that poultry are not herbivorous, a chicken in a farm eats worms. It was ignoring an essential point, consumer ethics prompted him to reject animal meal. One year after the French poultry industry was devastated by a dioxin crisis causing the media and consumers to question the Poultry feeding methods resulting in a 30% drop in sales over 3 months.
Gurus are insecure they risk telling you what you want to hear to keep your esteem or ask too much? Are they surrounded by the best or prefer mediocrity? Besides what are you going to do if you lose them? Do they communicate their expertise or do they keep their knowledge avoiding being challenged?
Advice: Give them challenges, stimulate them, balance talents.Ask your gurus to strengthen their watch, to discuss with external experts and involve them in a real risk management team.
Are the objectives and opportunities offered to the company causing the company to take too high a risk?
Years ago I had to face a marketing team that wanted to improve the image of a poultry brand raised in industrial buildings by qualifying them as "chicken raised by farmers"
Certainly the breeder who owns the breeding building was indeed a professional farmer but not a farmer releasing his chickens in the courtyard of his farm where they could peck grain that the vermilion cheeks farmer wife threw from his beautiful checked apron.
It was not legally speaking a lie (the guy really was a farmer) but it was a very good example of what would later be called greenwashing.
Are your brand goals compatible with your supply capabilities, your production and sales prices?
Do they push your teams into fraud or greenwashing?
Advice: Do not ask and do not believe in miracles, it is pushing the teams to the fault.Define the ethical values of your company and create a true ethical culture, ask the teams to anticipate solutions respecting these values.
Are communication and internal collaboration on risk effective?
20 years ago (again) my company's marketing and R & D department had validated with suppliers the possibility of using European bellpeppers for a range of turkey kebabs…
Without consulting the purchases department that certainly worked with the selected suppliers but did not see any trouble to buy Moroccan pepper the year a severe winter delayed the availability of bellpeppers in Spain.
Purchasing, quality, security, marketing, R & D, sales, production… each at its level handles some of the risk reputation of your brands. Do they collaborate? Are they informed? and involved in your brand strategy?
Will the purchasing manager validate your commitments on the impact of your purchases in terms of deforestation. Will quality team ensures the effective traceability of operations.
Are they all trained and informed about the typology of the risks incurred by your brand.
Do they share their information in a joint watchdog?
Advice : Have them formalized those COLLABORATIVE process or ask the CRO to have them done and create a Risk Management Team.
Does the company consider any scenarios resulting from the combination of several risks?
Risk scenarios can be complex and events uncontrollable.
The dioxin crisis mentioned above started with a problem of intentional adulteration of vegetable fat imported from Belgium and intended for feeding poultry with used mineral oils. Once the pandora's box was opened the consumer discovered that the poultry were also fed with animal meal and to finish a competing French company “was taken hand in the bag” by labeling meat of Belgian origin in meat of French origin destroying the little residual trust of the consumer in the product.
The scenario may seem unrealistic I swear it is true. Problems can arise and the risk management unit must propose complex scenarios combining quality, CSR issues along the supply chain, industrial accidents, climatic risks, natural or geopolitical disasters.
The anecdotes reported date back to my younger years, but the same mistakes are repeated on a different scale and can have far worse consequences than 20 years ago.
As with history, inappropriate behavior tends to repeat itself as individuals are the same.