An industrial accident. A revelation of unethical or criminal practices. A product recall. An extended service outage. Recent years have witnessed an explosion of social media commentary, strong interventions by regulators, and high profile pressure group campaigns. At the same time, changes in the global economy have arguably made the risk landscape for businesses more complex – dependent on moves into new markets, longer supply chains, higher risk operations, and increased pressure on costs.
Against this backdrop, companies need to re-examine their exposure to reputational challenges and their ability to respond to potential crises. Risks related to marketing, which often reflect reputational crises, are the most common cause of company stock price crashes, according to a landmark study conducted by our research partner, the Wharton School. On average, it takes more than a year – 80 weeks – for shareholder value to recover.