Designing a smart social media program can protect a company’s reputation.

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Customers no longer demand the best deal and often place values ​​such as equity and inclusion, or environmentally friendly practices above the needs of their wallet. (Photo: REDPIXEL/Adobe Stock)

A client, who has tens of thousands of people on Instagram, takes a selfie. In the background, hundreds of cattle are crammed into a small, muddy paddock and fed by a dozen workers in tattered clothing. The caption reads: “Bob’s Fast Food imports beef from a factory farm in Central Asia where the workers have no shoes. You are what you eat, do not support animal and worker abuse. #humanrights #animalrights #boycottbobs @BobsFastFood »

Within hours, the post garnered over 1.2 million views and 200,000 shares. The social media frenzy leads to a slot in the national evening news, with images of picket lines outside one of the biggest franchises. Bob’s Fast Food stock has plummeted and there are boycott calls on several social media platforms. Farm workers go on strike and accuse Bob’s of human rights abuses.

There is apparently no end in sight. Bob’s has already had to close sites around the world. It will take years for Bob’s Fast Food to recoup lost sales, and their social media feeds will forever be filled with negative press.

In an increasingly interconnected world, reputation is, or should be, a much higher quotient on any company’s risk matrix. If not, then a critical risk is not mitigated. Reputation is arguably the most critical intangible asset a business possesses.

The link between reputation, CSR and risk

Any CEO will say that reputation is a top priority. But what does this mean in the context of risk management in a world ruled by social media and 24-hour information?

The traditional cornerstone of risk is the quantification of potential financial losses. After all, the easiest way to get support from the executive suite in any risk management program is to tell them exactly how much a crisis will cost them in lost assets, time and sales.

However, as stakeholders diversify, so do their expectations. At 21st century, businesses are bound to become more pleasant. Customers no longer demand the best deal and often place values ​​such as equity and inclusion, or environmentally friendly practices above the needs of their wallet.

Likewise, investors are more interested in companies that fit their value system on the highest returns. They will retain shares of companies they view as honest and straightforward. They also expect the companies they invest in to uphold social values ​​such as gender equality and human rights throughout the supply chain.

Corporate Social Responsibility (CSR) is defined as a self-regulating business model in which a company is committed not only to making money for its shareholders, but to implementing policies that have an overall positive impact on people and the planet. CSR initiatives would include a company’s diversity, equity and inclusion (DEI) and environmental, social and governance (ESG) initiatives.

The CSR reports highlight how their reputation is a critical risk factor and how the success of their DEI and ESG initiatives is also critical to their reputation. These topics are increasingly driving stakeholder decisions.

If CSR, DEI and ESG are so closely tied to brand reputation, and brand reputation is a critical risk factor for companies, then they need to be integrated into risk management practices. .

Global crises and their effects on reputation

One need only look at the Ukraine-Russia conflict to see a near-perfect analysis of reputational risk and how CSR planning can directly affect how social media helps or hurts during an international crisis.

President Zelenskyy’s masterful use of social media arguably won him global moral support and no doubt led to much-needed financial and military support for Ukraine. His campaign to use social media to deliver accurate, real-time information has also mitigated, but not prevented, the spread of misinformation. Yet the success of his swift and vigilant exploitation of social media is unprecedented in politics.

Major restaurants and retailers came under social media scrutiny when they were reluctant to close or react at the onset of the crisis, which began on February 24. McDonald’s and Starbucks, along with others, didn’t announce closures until March 8, nearly three weeks away. after the initial invasion of Russia, after the value of their shares fell by more than 10%; the main driver being investor anxiety over the spread of boycott hashtags around social networks. Despite efforts to redirect both messaging and profits to humanitarian efforts, McDonald’s and Starbucks have yet to bounce back completely several months later.

Juxtapose that to Apple’s early decision to close its retail outlets on March 1 and its well-defined argument for not shutting down access to the App Store so Russian citizens can access neutral media. Apple’s stock value recovered and gained within 30 days of the initial invasion.

Similarly, BP and Shell sold their Russian oil interests in late February and have since recouped most of their stock value, or recouped and gained, respectively. BP is a prime example of a company that has learned hard lessons over the past 20 years regarding reputational risk and is trying to learn from its mistakes.

Geopolitical crises should be assigned a high impact rating in a risk assessment. Negative social media press should be considered high probability and high impact, and mitigation efforts should be integrated into both risk and CSR planning.

Companies must anticipate any international crisis likely to affect their reputation. They need to strategize long before these crises set in, and they need to communicate early and often with the general public in a compassionate and authentic way. If a company waits too long to do the right thing, which may be just days after the competitor, the messages can be interpreted by investors and the general public as too little, too late.

What is the next step ?

There are several simple things businesses can do now to ensure that when they’re in the social media spotlight, they can withstand the pressure and come out on top.

Reorganize DEI and ESG initiatives and integrate them into overall CSR planning. Thought leaders such as Forbes, Investopedia and SHRM all highlight how CSR can improve brand image, build investor confidence and increase retention. Yet many public CSR reports are simply updated from the previous year with vanilla changes to board and committee structures and a simple swap of photos. This kind of complacency is what leads to loss of investor confidence in times of crisis. For the many small and medium-sized companies that do not have formal DEI or ESG initiatives, it would be helpful for them to create these frameworks now.

Think globally, act locally — but also act globally. Even the smallest company can no longer afford to operate with disregard or a neutral view of the global geopolitical or environmental landscape. Companies have long taken the “not in my back yard” approach to international events, choosing to shut up and go about their business. This approach simply won’t cut it with the millennial and Gen Z workforce and investor base.

If companies can adopt a more diverse and transparent approach to any international crisis through compassionate objectivity, they build trust and position themselves as thought leaders for their staff and investors; and it’s a bonus if companies implement their DEI and ESG plans and take active steps for humanitarian efforts during a crisis. These measures must be well integrated into their risk management and communication strategy.

Integrate social media into business value drivers and CSR and risk management framework. Most social media strategies are integrated by marketing into a product and asset promotion schedule. It is important to have a social media plan that is socially conscious, forward-thinking and intentional that considers local and global events, as well as important social issues and aligns them with the company’s mission and vision. It is equally important to ensure that the social media calendar is suspended in the event of a crisis or disaster, and used wisely as part of the incident communication strategy. There’s nothing more confusing (or deaf) to stakeholders worried about a crisis than seeing the usual weekly brand awareness posts on social media.

Have a crisis management plan that is tested and updated often. The importance of a relevant and up-to-date crisis management plan cannot be underestimated. If COVID hasn’t already taught this lesson, a crisis such as the Ukraine-Russia conflict is a perfect example of how political upheaval around the world can and will affect even the smallest businesses. Both large and small businesses must be 21stbusiness continuity and last century crisis plan in place.

No plan can cover all scenarios, but a robust business continuity and crisis response framework, fully integrated into every department and level of the organization, serves as a place from which to pivot and adapt to any situation in evolution. It is the mechanism by which an organization can ensure that all of the above measures are implemented appropriately in times of crisis.

Misti D. Freeland ([email protected]) is Associate Director of Risk and Litigation Consulting at Lowers & Associates. His experience in civil litigation, insurance defense and corporate governance helps clients manage their expert witness needs.

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