November 21, 2024
Reputation: How to Protect a Priceless Asset
Many events can damage an organization’s reputation: a financial scandal, a highly publicized discrimination case, a product malfunction, and more.
Part I: A lesson from Boeing
“Quality Escape”
Following the incident earlier this year, when part of a plane’s door blew off during an Alaska Airlines flight, Boeing’s CEO Dave Calhoun referred to the cause as a “quality escape,” meaning a lapse in Boeing’s production and inspection processes allowed a defect to pass undetected.
Boeing cooperated with the FAA, which grounded all Boeing 737 MAX 9 planes, demonstrating their commitment to addressing the issue. However, critics noted that Boeing’s crisis communication was once again reactive rather than proactive, a continuation of its slow and detached responses from previous crises, such as the 737 MAX incidents in 2019. While safety protocols have improved, rebuilding public trust remains an ongoing challenge.
Boeing’s Crisis Management
Boeing’s crisis management efforts have included grounding the fleet, investigating what went wrong, and conducting thorough inspections to prevent future occurrences. Even so, experts have suggested that Boeing has struggled with public perception since the larger 737 MAX crisis in 2019, and the company’s response to these crises has been seen as lacking the speed and assurance needed to restore public trust quickly.
Overall, Boeing has faced challenges in managing its reputation post-crisis. While they have improved safety protocols and cooperated with authorities, their communication strategy has often been criticized as insufficient in calming public fears and rebuilding trust. The company’s long-term recovery depends heavily on sustained transparency and action to assure the public of its commitment to safety.
Part II: Is your company prepared to protect its reputation?
Insurance
Specialized crisis containment or brand protection insurance can provide a layer of protection. These policies provide coverage over and above your “traditional” liability coverages to help you recuperate quickly from a reputational failure. For example, crisis containment insurance will reimburse you for the fees and costs of expert consultants needed to respond to one of the many crises specified in the policy. You can often buy endorsements, or policy additions, that add crisis management coverage to your product liability and recall policy.
Unfortunately, such insurance is designed to help with the financial impact of a crisis but cannot fully restore a company’s reputation, which is a long-term process involving public relations and management strategies. No insurance policy can restore a corporation’s stock or a company’s reputation to its pre-loss levels after a highly publicized crisis, such as Boeing’s. Preparedness is key. A speedy and appropriate response can often prevent a small crisis from becoming a larger one.
The hotel industry is a good example of preparedness. In a well-run hotel, every on-duty manager can access a binder with response guidelines for adverse events, each tailored to the operations of the particular hotel, addressing specific risks such as health scares, fire safety, or guest incidents.
Your Crisis Management Plan
To develop your crisis management plan, analyze your risk exposures and identify actions to manage them. A thorough analysis will require the input of various departments and possibly outside experts. For example, what vulnerabilities and risk exposures do your company’s legal department or legal counsel see? What risk factors does the company include in public disclosures? What are other potential sources of reputational risk?
In addition to securing insurance coverages, your insurance broker can offer loss prevention suggestions and strategies. If necessary, your broker might even recommend an outside risk manager with a particular area of expertise.
A public relations firm that specializes in crisis management can help your firm create crisis communication plans for various scenarios, including training spokespeople and simulating crisis scenarios. Having well-considered responses ready will give you one less thing to worry about when an emergency occurs. For more information on protecting your firm’s reputation, please contact us.