Brand-Ageddon: Reputational Risk, Resilience, And You

2. WEBINARBrand-Ageddon: Reputational Risk, Resilience, And You Nick Hayes, Analyst Renee Murphy, Senior Analyst May 7, 2015. Call in at 12:55 p.m. Eastern time

4. Every risk type carries reputational impact.

5. Agenda • Why reputational risk is rising • What this means for the role of risk • How to improve mitigation strategies

6. Your company’s value is largely comprised of intangible assets today.

7. Performance is more closely tied to your company’s image Effective use of social media actually improves the market presence and liquidity of companies. 60% According to a study by Reputation Institute, your willingness to buy, recommend, work for, and invest in a company is driven 60% by your perceptions of the company — and only 40% by your perceptions of the products and services it sells. People view and interact with brands as they do other humans, as social actors.

8. Risk concerns are shifting accordingly Base: 1,468 global business and IT decision-makers (1,000+); Source: December 5, 2014, “Dissecting Global Risk Perceptions And The Effects Of Customer Obsession” Forrester report

9. New business priorities amplify this trend Base: 1,468 global business and IT decision-makers (1,000+); Source: December 5, 2014, “Dissecting Global Risk Perceptions And The Effects Of Customer Obsession” Forrester report

10. Reputation is an even greater concern in the age of the customer Source: December 5, 2014, “Dissecting Global Risk Perceptions And The Effects Of Customer Obsession” Forrester report

11. Agenda • Why reputational risk is rising • What this means for the role of risk • How to improve mitigation strategies

12. Brand resilience The ability of the brand experience to live up to and remain consistent with the brand promise, maintaining its integrity even in the face of damaging interactions, events, or circumstances

13. Risk pros’ role: ensure the brand experience aligns with the brand promise Brand resilience Resilient brand Vulnerable brand

14. Marketing’s role: Risk’s role: Coordinate risk and marketing roles • Define and set the brand vision • Build and manage customer relationships • Track brand health • Safeguard the brand experience • Assure customer trust • Track reputational risk exposure ALIGN WITH MARKETING; SET CLEAR PARAMETERS

15. Reputation factors heighten the impact and probability of every risk type Greater impact: More value in intangible assets and higher consumer expectations raise the stakes when any risk event occurs. Marketing risk Security risk Sustainability risk Legal risk Financial risk Third-party risk Higher likelihood: New business dynamics proliferate the brand, increase transparency, and reduce control. Operational risk

16. Agenda • Why reputational risk is rising • What this means for the role of risk • How to improve mitigation strategies

17. Corporate risk managers are not addressing reputation

18. Reputation is hidden in other risks

19. Reputation is at risk Risk Impact Risksowner Product recall Financial operational regulatory reputation Finance operations compliance Reduction in workforce Financial operational reputation Finance human resources Supply chain problems Financial operational reputation Finance sourcing/vendor management Security breach Financial operational regulatory reputation Security

20. Reputational risk assessment workflow Integrating reputational risk management into your current risk process Document impacts Document treatment of risk Mitigate risk Monitor risk Identify risk Document risk Assign risk Assess risk Document reputa-tional impacts Document treatment of reputa-tional risk Mitigate reputa-tional risks impacts

21. Impact severity depends on reputational attributes Impact rating of 1 to 10 (1 being negligible impact and 10 being catastrophic impact) Company size — the larger your company, the smaller the impact number.Incident management — the better you are, the lower the impact number.Impact rating score is an average of the four attributes. Scoring (0 to 2 = low impact; 3 to 6 = medium impact; 7 to 9 = high impact; and 10 = catastrophic impact)

22. Reputational Impact by Industry

23. Reputational Impact Score Impact Score Risk Impact RisksOwner 5 Product Recall (Automotive) Financial Operational Regulatory Reputation Finance Operations Compliance 6 Reduction in Workforce (Airlines) Financial Operational Reputation Finance Human Resources 8 Supply Chain Problems (Retail) Financial Operational Reputation Finance Sourcing/ Vendor Management 3 Customer Security Breach (Oil and Gas Production) Financial Operational Regulatory Reputation Security

24. Build three lines of defense model Brand resilience steering committee Brand experience and marketing strategy Direct and indirect marketing Customer service Brand health measurement Customer experience Customer intelligence Risk monitoring and brand protection Employee engagement Human resources Crisis management Public relations Technology management Security and privacy controls Compliance and risk management First line Third line Second line Customer touchpoints and brand exposures that form impressions and public perception Reactionary engagement and internal functions that direct the first-line strategy Internal functions to monitor the efficacy of the first two lines and to remediate risk events when prior efforts fail

25. Recommendations • Prioritize risks that have the greatest connection to your brand’s North Star. • Pivot your strategy as your reputational risk environment evolves. • Reassess your brand resilience after any reputational crisis occurs.

26. Yes, it matters Worst Best

27. Nick Hayes nhayes@forrester.comTwitter: @nickhayes10 Renee Murphy rmurphy@forrester.com