Although most CEOs and board members know their companies face significant risks, most are not adequately prepared, new research reveals. Organizations face mounting reputational risks from cybersecurity, poorly monitored third-party partners, and accusations of poor corporate culture and conduct. Yet many organizations are unprepared to respond to those threats, and many executive leaders don’t appreciate the critical importance of the brand’s reputation, according to the Deloitte study, Illuminating a Path Forward on Strategic Risk. The Deloitte Risk and Financial Advisory surveyed 400 CEOs and board members from U.S. organizations with $1 billion or more in annual revenue.
Most (96 percent) CEOs and board members expect their organizations will face serious threats or disruptions to their growth prospects in the next two to three years, according to the Deloitte survey of 400 CEOs and board members. Yet many assign low priority to the planning and investment needed to identify, respond to and mitigate those critical risks.
“Leaders know there are threats on the horizon, but many are not viewing or managing them strategically or understanding how threats are interconnected,” states Chuck Saia, CEO of Deloitte Risk and Financial Advisory, Deloitte & Touche LLP in a press release.
Many executive leaders still use traditional approaches, tools, and technologies to detect and manage threats. “Today’s risk environment requires leaders to challenge the status quo, prioritize investments and identify and analyze threats before they emerge,” Saia says. “Simply put, accelerating performance and growth requires a different way of thinking about risk.”
Many Ignore the Importance of Brand Reputation
Many leaders don’t recognize the critical importance of protecting the corporate brand reputation, according to the report. Fewer than half of surveyed executives have discussed risks to the organization’s reputation in the past year. Many respondents (53 percent of CEOs and 46 percent of board members) lack the ability to identify events that can damage the organization’s reputation. Yet many examples show how reputational damage can sink stock prices, shareholder value, and disrupt executive and brand stability.
Rather than viewing reputational risk as a critical strategic threat, roughly 40 percent of survey respondents view it merely as a byproduct of breaches and other security threats. This is concerning since market value largely stems from intangible assets such as brand equity, intellectual capital and goodwill, Deloitte warns.
A Lack of Risk Reporting
In addition, about 70 percent of CEOs acknowledged that their organizations do not regularly report to executive management on culture and conduct risks. Three in four do not intend to improve upon or adopt such a report. That’s also concerning since leadership has significant control and responsibility over those areas, Deloitte warns. Many CEOs seem to be taking a head-in-the-sand ostrich approach to risk and reputation monitoring and management. That management approach has never worked well.
“The survey results clearly show that CEOs and board members need to elevate strategic risk as a top priority and understand that there are solutions available to identify, monitor and manage these complex threats,” Saia says. How an organization manages risks can mean the difference between being a disruptor and being disrupted.
More Businesses Monitor Online Reputations
Previous research this year showed that more businesses consider reputation management critical and that many are employing social media monitoring to track the health of their reputations and spot possible dangers.
More than a third of businesses (35 percent) plan to allocate more resources to online reputation management, according to the survey by Clutch, a third-party reviews website for B2B agencies. About two-thirds also use online reputation management tools, and about half use third-party review sites, social media listening services, and external agencies (which may use their own media monitoring tool). Businesses typically monitor review sites, Google search results, and news websites.
Bottom Line: Corporate leaders expect dangerous waters ahead, yet their organizations are surprisingly unprepared to prevent or manage the risks, new research reveals. Many corporations lack ways to detect and monitor potential risk. They also lack well-delineated management plans and process to respond to threats that can damage the corporate reputation. Social media monitoring and measurement can provide an early warning system to alert organizations of emerging reputational dangers.
William J. Comcowich founded and served as CEO of CyberAlert LLC, the predecessor of Glean.info. He is currently serving as Interim CEO and member of the Board of Directors. Glean.info provides customized media monitoring, media measurement and analytics solutions across all types of traditional and social media.