Reputational Threats — Integral Part of Every Crisis Management Strategy

When planning and preparing, crisis managers need to take into consideration both operational and reputational crises.

Operational Crises

Operational crises reflect the early definitions of organizational crises that included the disruption of the operational activity of a company. Generally, operational crises lead to a reduced ability of a company to generate revenues.

Examples include industrial or transportation accidents along with damaged production goods. Operational crises can also take the form of dangers for stakeholders such as risk of injury to customers or employees. First and foremost, stakeholder safety should be the primary concern during an operational crisis along with the need to maintain operations.

Most risk assessments and crisis management plans will have a strong focus on operational crises. However, managers are increasingly facing reputational crises as well.

Reputational Crises

Reputational crisis involve situations where an organization risks damaging its reputation. An operational crisis obviously has implications for a company’s reputation. However, a reputational crisis does not have the same impact on operational activity or stakeholder safety.

An example of a reputational crisis would be an activist group publicly claiming the company is harming the environment or is failing to comply with local regulations. Social media has made it easier for everyone to publicly accuse of organizational irresponsibility.

The connection between social media and reputational crises has led to the association of the social media crisis to any negative information about an organization appearing online. In practice, some type of negative information can lead to a full-blown reputational crisis (damaging the company), some negative information represents a paracrisis (a crisis risk that can be mitigated), and some of the negative information can have no effect on the reputation of a company.

The Fine Line When Addressing Reputational Threats

Crisis managers have to identify the information that can lead to a reputational crisis or paracrisis and decide how to respond to the actual crisis or threat. If operational crises require the whole crisis team working on it, reputational crises and paracrises can potentially be handled by managers closest to the issue at hand — however this also depends on how far-reaching the crisis is.

For example, managers involved with the supply chain can address a situation where the organization’s supply chain practices or suppliers are called into question.

A distinctive feature in communications between operational and reputational crises is the matter of interpretation. Denying an operational crisis is a sure way to damage a company’s reputation. Stakeholders can easily verify the facts and establish whether the company is sharing the truth.

Reputational concerns, however, can in some cases be a matter of interpretation. Stakeholders may disagree on whether or not a company’s practice is responsible or not. Managers must decide if they will change or defend the practice in question.

With the wide spread of social media usage, reputational crises and paracrises will continue to steadily increase. While companies should prioritize operational concerns at the core of their crisis management and communication efforts, reputational concerns should be taken into consideration as well. Managers must integrate reputational risks and threats into their crisis management and communication strategy to be prepared for any situations that may spark in this digital world.