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It takes 20 years to build a reputation and 5 minutes to ruin it Warren Buffet, US Financier
Consider the positive sides of reputation: Reputation can be enhanced following a well-managed crisis!
Example: Tylenol, Sept. 11
Rochette M (2007)
Think: So whats the worst thing I could read or hear about my business?
http://www.thesmokinggun.com/ enron/enronethics2.html
Northern Rock has been one of the fastest growing British banks. But it's now set to become famous for reasons it would rather keep quiet. It's become the first bank in years to seek emergency funding from the Bank of England in its role as 'lender of last resort' [BBC Business News Sept 2007]
Businesses are more likely to take corrective action before a crisis erupts if everyone involved with the business:
Understands the businesss values, strategic objectives and underpinning
policies Is alert to the major potential sources of risk in their specific business context Knows where to turn for help and advice on a course of action Knows where to refer risks that are beyond their freedom to act or risk exposure limits
Contributes actively to a continuous flow of information on potential threats & opportunities to the business and its reputation
Develop scenarios: what could happen next? Establish response: how should we react? Challenge: what could go wrong? Define roles: who should do what?
One of the great lessons about any type of contingency planning is that crises rarely happen exactly as anticipated, and therefore the less detailed, more flexible plans generally prove to be far more effective in a real crisis than the detailed, prescriptive ones [Davies D (undated)]
J&J issued a massive recall of 31 million Tylenol bottles, costing approximately $125 million and set up a crisis hotline. In fact the cyanide that caused several deaths had been methodically introduced into bottles on store shelves - the culprit was never established.