Overcoming reputational risk in an age of disruption - KPMG United Kingdom
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Brand matters: Overcoming reputational risk in an age of disruption

Overcoming reputational risk in an age of disruption

Tim Howarth, Head of Risk Consulting at KPMG in the UK, looks at the heightened reputational risk facing organisations today and what they can do to bolster their defences in an age of disruption.


Partner and Head of FS Consulting and Risk Consulting

KPMG in the UK


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Brand matters - man whispering in colleague's ear

The result of discussions with a cohort of 150 UK chief executives, the 2017 KPMG UK CEO Outlook looks at the issues business leaders must make sense of in order to survive in today’s complex world. But as they wrestle with geopolitics, new technologies and cyber risk, CEOs’ chief concerns are closer to home. Tim Howarth, Head of Risk Consulting at KPMG UK, looks at the heightened reputational risk facing organisations today and what they can do to bolster their defences in an age of disruption.

Over the last year, a raft of seemingly indestructible businesses have crumbled at the hand of damaging PR disasters. With plummeting share prices and diminishing consumer confidence in these brands playing out across mainstream and social media, it is no wonder that organisations are more concerned than ever about protecting their reputation.

This was mirrored in the UK CEO Outlook, as UK business leaders repeatedly told us that reputational risk is one of the key factors keeping them awake at night. Second to only operational risk, the prospect of brand damage didn’t even feature in the top ten risks that CEO feared would impact their businesses last year.

This shows just how fragile company perception is in a world of complex change. Nearly a decade on from the financial crisis that rocked consumer trust, the nation is more cynical of businesses than ever. Previously, CEOs’ focus was purely on keeping shareholders happy. Now, they must consider several stakeholders, each of whom has the power and communications channels to significantly impact the external and internal perception of their organisation.

While consumers have never been more empowered, brand loyalty is at an all-time low. And in a disruptive market, the health of a brand will make or break a business. So, how can businesses shore up their defences and preserve the reputation they have worked so hard to build?

Transparency and communication The report echoed our on-going discussions with business leaders: they know they need to get closer to their stakeholders and they are working hard to do so. While disruption is becoming the norm for many UK businesses, it is perplexing; so clear, consistent and reassuring communications will pay dividends in instilling confidence in the customers businesses need if they are to survive these unchartered waters.

Focus on the customer Encouragingly, many CEOs recognise the need to get closer to their customers. With more than half realigning their businesses to do just this, they are positioning themselves to learn about their customers’ fast-changing behaviours and expectations. This insight will be vital in the battle to serve the consumer, and also in helping firms understand how they can disrupt within this new ecosystem - and shake off the threat of new entrants hungry to profit from complacent competitors.

Clear and consistent values In a world scarred by fractured trust, businesses must demonstrate that they stand for more than simply generating profit. They need to show that they have taken on a greater responsibility for each of their stakeholders and are driven by a clear purpose and strong values that underpin every aspect of the brand experience. This is critical in resonating with a disenfranchised society, who, empowered by direct communications channels, has a direct stage through which it can instantly reshape the perception of a brand.

Scenario plan for the future A key step to bolstering any business’s defences is to undertake early impact assessments and scenario plan for the future. It is no coincidence that those organisations that have repeatedly suffered reputational damage have become the most resilient and the most agile, as they mastermind creeping regulation while adapting to stay ahead of customer needs. These are the firms that have been caught unaware in the past, and swiftly understood the importance of planning for the future and the ‘what if’ scenarios they need to control to withstand future crises.

The existential threat for boards of businesses is the sustained attack on their reputation that has the power to demoralise customers, employees and other stakeholders. Daily media headlines speak volumes: no sector is untouchable. From airlines and PR firms to accountancy firms such as our own, every business is susceptible to some degree of reputational risk. But for all the firms that have crashed and burned on the public stage, many more have dusted themselves down from disaster, reinvented their businesses and their brands. There has never been a better time to consider how your organisation would withstand reputational risk and take the vital steps to ready it for the future.

KPMG’s UK CEO Outlook 2017: Disrupt and Grow is available here.

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