Every organization faces "routine" risks or challenges in the normal course of doing business that can significantly impact the bottom line. These can include facility expansions, litigation, employee injuries, change in management, government regulation and public policy issues.

There are also extraordinary events, such as terrorism, natural disasters, geopolitical risks and even bankruptcy—or unforeseen crises, like product recalls, hostile takeover attempts, building fires, privacy breeches, supply chain disruptions, and damaging rumors. The key is to quantify the risks and identify the resources needed to manage the issue, while demonstrating a culture of transparency, integrity, and concern so that the company's reputation never comes into question.

The court of public opinion can often cause more harm than a court of law—and it can happen in an instant. Brand and reputation are critical corporate assets, and reputational risk and crisis management are essential to the development, preservation, and enhancement of those assets. Stakeholders and influencers demand that companies be better prepared, demonstrate true leadership, act responsibly, and provide immediate answers.

In the absence of reliable, official information, stakeholders will listen to others—regardless of their access to the facts or agenda. An organization's best ammunition is to have a strong reputational risk and crisis management plan in place to manage all complexities. Oftentimes, an organization's ability to control the debate will determine its success or failure when facing a risk or crisis.

Businesses that understand and connect directly with their stakeholders can build a competitive advantage. Reputational risk and crisis management are about the ongoing dialogue a company holds with each audience, not just during and after an incident. Long-term, productive stakeholder relationships are about garnering support for an organization's business and leadership objectives.

What Will You Say When They Ask What Happened?
Reputational risk and crisis management plays a vital role in the overall effort to build, protect, and enhance an organization's brand and reputation.

Executives need to ask themselves the following questions:

• Do I understand the potential risk and crises that could impact my organization?
• Do I know how to communicate in order to control the message associated with my risks, issues, and crises?
• Am I prepared to answer the tough questions?
• Am I ready to respond to an unexpected event or crisis?
• Do I know who my stakeholders/audiences are? Who are my allies? Who are my adversaries? Do I only talk to these groups on an as-needed, reactionary basis, or do I have a proactive outreach program?
• What degree of importance does my organization place on communications?
• Do I have a strong team, utilizing both internal and external resources, that can make strategic decisions about what to say and how and when to say it?
• Have I identified key spokespeople and trained them on how to respond to an incident or crisis?