Risk auditing, a profitable investment

There isn´t a day that we open the digital version of any newspaper and not encounter a reputational crisis: a company, a public institution, a cultural organization or an NGO accused of illegitimate behavior.

Some of the problems they face are of a technical nature: a toxic leak, an unexpected accident, food contamination, a defective product sold to thousands. I would dare to say that the problem is the least of their worries. Organizing rescue teams, health care for the wounded or the return of damaged objects takes time and resources, but companies are well prepared. In Spain, moreover, local and regional public administrations are very well prepared.

In recent decades, risk analysis has become a theoretical and practical autonomous discipline of considerable importance, especially in the field of large industry and infrastructure, which require huge investments and foresee a long-term recovery: oil exploration, pipelines, construction of dams, etc. When these projects include interventions in unstable countries for political, social or economic reasons, all the parties involved (companies, banks, governments) study the risks of the operation very carefully, because an evaluation error could ruin any institution, no matter how solid.

In addition, companies and organizations engaged in particularly hazardous activities are required by law to use special prevention programs, with important communicative implications.

Serious organizations devote time and energy to know the risks involved in their activity, for themselves and for their participants (managers and employees, customers, partners and shareholders) and other audiences. It is a manifestation of responsibility in leadership: not driving a car without the appropriate reviews, without paying attention to the drivers warning that something is not working correctly, etc..

The best people to do this, without a doubt, are the internal staff. The engineers who have designed the processes, the directors of operations, the people in charge of the facilities, are the ones who best know the guts of the organization, and who can more easily decide how to identify those risks, reduce them and turn the company into a “safe environment”, for those inside and outside.

But the damage suffered by companies as a result of a crisis refers more to the reputational impact than to the physical one. Not only do we have to face the problem, but we also have to take the initiative to remain informed about the measures taken and what remains to be done: what we will do to prevent a repeat incident, how we will compensate, and how we will return to the previous situation. Ah, and how we will apologize to those affected.

On the other hand, there are many benefits to having external support in order to evaluate the communicational risks of the public facet of a crisis. Without a doubt, it can also be done in house, especially if you have an area of reputation and corporate communication prepared and with authority. Prepared, because they know the business inside out and know how to propose initiatives that solve real problems, in the language of management, which is often quantitative. With authority, because without it, it is very difficult for a proposal – which normally involves spending something today in order to earn something the day after tomorrow- to be heard.

Your best ally

However, there are two important advantages to asking external advisors to carry out such a reputational risk assessment. First, because it overcomes the bubble perspective. It is only natural that a well-functioning company (the others don’t even consider doing a risk assessment, they simply put out fires every day) should internally develop high self-esteem. In those circumstances, objectively thinking “what could go wrong and create a problem for us” is more difficult. It won’t happen, or if it does, we’ll be prepared.

An external advisor can confirm that security, or remove the blindfold. Second, no matter how much authority the person responsible for communication has, an external voice is usually more listened to. Instead of being the “enemy” of the internal communicator, it may be his or her best ally, because it will often confirm fears and suspicions already felt, which may have been neglected for some time.

The external advisor can also help in another facet: the communication of these risks, which we could define with Heath & Abel as “the intentional exchange of information on health, ecological or any other kind of risks, carried out between the interested parties.” Because the social responsibility of the institution leads to these risks being brought to the attention of the public concerned.

Today, risk communication and crisis communication are moving towards integration. One of the great communication gurus, Mathew Seeger, points out that in the past, risk communication was an independent discipline, whose aim was to convince individuals and social groups to be aware of identified risks (smoke, driving under the influence of alcohol, etc.) and to decide to change their behavior, and therefore had a medical focus; whereas crisis communication was associated with the public relations arena and the need to repair a deteriorated corporate image after a crisis. However, in recent years the two traditions have converged into a single discipline, crisis and emergency communication, because when developed in an integrated manner, they are more effective.

Risk analysis comprises four steps: risk identification; description, both objective – with quantitative parameters – and subjective; risk assessment (severe or mild, indispensable or dispensable, type of consequences, etc.); and risk communication to the public.

The external consultant can provide invaluable assistance in exploring, diagnosing and treating the reactions of different stakeholders in relation to the first three steps, and fully in the fourth.

Because experience shows that no organization can succeed in a crisis, or at least can limit damage and recover quickly, without the help and favorable assent of the public.

Yago de la Cierva
Specialized consultant in crisis communication.