Jason Eatock, head of SME, Zurich Insurance, says that while SMEs are more aware than ever about the need to protect reputation, they need help from brokers to take the right steps
Examples of business reputation loss have been widespread and high profile in the corporate arena in recent years. But how has that changed smaller companies’ attitude to recognising and managing this type of risk?
Research suggests that SMEs are concerned about reputation risk and have been for some time. A 2013 Datamonitor SME report showed 51% of businesses were either ‘fairly’ or ‘very concerned’ about reputation damage and the issue was an area of interest for insurance cover.
Zurich’s SME Risk Index highlighted an increasing awareness of reputation risk alongside cautiousness about its potential business impact. Small companies that survived the recession are well aware that their fortunes can turn on one contract, therefore the importance of a sound business reputation is attracting greater attention.
Although social media is considered a reputation threat by only about 30% of SMEs according to Zurich’s Risk Index - with particular reference to reviews and rankings – the online dimension has certainly exacerbated the level of risk for companies. Social media has the potential to send bad news about, or criticism of, an organisation around the world in seconds.
Building and protecting reputation
Despite their increased interest, we are yet to see SMEs actively managing reputation or investing in relevant insurance cover. The latter is more understandable, as while the market for reputation-related insurance products is becoming more relevant, it remains underdeveloped and in need of more options for businesses to transfer such risk.
In terms of reputation, the long-established principles of doing good business apply equally today. Maintaining customer service, ensuring products and services live up to their promise, validating the quality of suppliers and following up with customers to verify their satisfaction might be considered obvious, yet businesses mustn’t overlook that doing the basics is critical to building and managing reputation.
This can be supported by having insurance cover that will respond when needed. Companies should select a high quality insurance product that responds in the event of a disaster and trust the advice of their broker rather than making decisions based on price alone.
For example, brokers can help companies consider business interruption extensions relating to key customers and suppliers to give rigour to the supply chain and ensure small companies are able to remain responsive to customers following an interruption in another part of the chain.
But the intangibility of ‘reputation’ and the uncertainty in assessing the impact of any event only adds to the complexity of writing insurance against small businesses’ loss of reputation.
The game-changing nature of digital media
The rise in the use of internet-enabled, mobile devices has been accompanied by the willingness of people to relay their unhappy experiences. When online, these comments are highly shareable through Facebook, Twitter or other sites like TripAdvisor for hotels and restaurants or Checkatrade for tradespeople. The ability for negative comments to become viral is a real threat to business reputation and, ultimately, bottom lines.
Studies suggest that companies can gain tangible impacts to the bottom line by improving their virtual reputation. That’s why Zurich UK is partnering with online reputation management company Reputation.com to launch a user-friendly risk management tool that translates the complexity and volume of online information into simple dashboards, which will help brokers and SMEs create, monitor and improve their online reputation.
In one example, the reputation of an international property dealer came under threat when a former employee published false allegations about the company online. The amount of web hits this attracted caused the content to be featured on page one of Google search results and began affecting the company’s business relationships.
To combat this potentially disastrous situation, Reputation.com implemented a content campaign to downgrade the negative comments in search results and improve the appearance of positive or neutral material. Consequently, search results changed to reflect a more positive and accurate picture of the company, prevented a new threat and provided greater reputation stability.
Happy and unhappy customers will potentially talk about you online, which is beyond your control. But you can influence the way those comments and conversations affect your business reputation.
Contact your Zurich representative for more details about Reputation.com. For the latest insights, shareable content and to accumulate CII CPD learning hours, visit www.insider.zurich.co.uk and follow us on Twitter @ZurichInsider.