Reputation is everything in business, so don’t let computer hackers wreck all that you have built, writes John Salmon
Just six months ago adult “dating” site Ashley Madison was said to be considering raising $200 million on the London Stock Exchange or AIM market. But that was before a business, founded on the strength of its digital reputation, fell victim to an international hacking group.
The fall-out from the leaking on the internet of the highly confidential details of 30 million subscribers is still being felt, not least by former chief executive Noel Biderman, who was forced to step down from the company he founded.
Ashley Madison’s motto is “Life is short. Have an affair”, but perhaps “Life is Short, Protect Your Reputation” would have been more useful to the long-term financial success of the business.
In the digital world, threats to reputational damage come from all quarters. A potential cyber-attack as experienced by the Canadian company and the unstoppable, some would say insatiable, rise of social media are two new threats that businesses must face up to.
Whether a cyber-attack involves online theft or exploitation of intellectual property, business information and customer data, or a denial of service, it strikes at the heart of any organisation, and for most organisations the question is not whether they will suffer a security incident, but when they will be hit, and what they will do when it happens.
Worryingly, just 33 per cent of respondents to a Pinsent Masons study said their businesses are well equipped to deal with cyber risk, while a UK Government commissioned survey found that around 90 per cent of large organisations and 74 per cent of small businesses had experienced information security breaches in the past year. Clearly, businesses need a data breach response plan to ensure their reaction to incidents is decisive and effective.
Social media is here to stay and it enables instant, global and unfettered communication. Some content will be spontaneous, ill-considered and misjudged and will need to be dealt with on a case-by-case basis, while other potentially damaging information may be part of a carefully-planned campaign, for example by an organised action group.
It is how your business reacts which can make all the difference to limiting reputational damage, preserving your bottom line and protecting your future. In the past, companies only had to worry about what individual customers or the media had to say, but with an ‘always-on’ media, a single tweet can destabilise stock prices, impact on sales, unsettle staff and damage your brand.
The rise of social media has added a new dimension and pace to reputation management and it is imperative your business has a plan on how to deal with online negativity.
Companies do not want to be seen to be taking heavy-handed action against disgruntled customers who vent frustrations on social media. Sometimes a nuanced PR strategy, and/or social media response, will turn the tide when damaging, but true, allegations about the company go public.
However, in cases where the line is crossed, businesses will often have no option but to use legal tools to defend their brand. It may be a harder-line response, reliant on laws on defamation, malicious falsehood and intellectual property for companies, and potentially privacy, harassment, and data protection for individuals such as employees or directors will be appropriate. A new study by Aon shows image protection is a top priority for businesses, with damage to brand and reputation the number one concern. The survey involving 1,400 companies found damage to brand and reputation was rated as a greater concern by businesses than economic slowdown, regulatory changes and increased competition, among other risks.
The report said: “Major headlines about massive data breaches, large-scale product recalls, mysterious plane crashes, and aggressive government investigations have raised concerns about corporate reputation and brand damage. The unpredictable nature of such crises, in an age of 24-hour news cycles and instant social media, poses a serious threat to a company’s hard-earned global image.”
The Aon results echoed findings in a 2014 Deloitte survey on reputational risk which discovered 87 per cent of executives rated reputation risk as more important than other strategic risks. Building and maintaining a strong reputation is at the core of any organisation’s success, and the digital world is making that job harder.
• Pinsent Masons free seminars Protecting your corporate reputation in a digital world’ will be held in Glasgow, Edinburgh and Aberdeen on 21 and 29 October and 13 November respectively.
• John Salmon is a partner and head of financial services with Pinsent Masons, www.pinsentmasons.com