Brand Risk can take many forms. Try a new recipe (Coke, O Henry) and find out that it didn’t work, (where are those peanuts!) and lose the trust (and money) of customers; or, it works famously (M&Ms) and create a whole new generation of customers.
Or suffer an imitator whose invasion of the look and feel of your product trumps yours; or having a toxic encounter due to poor safety while promising your green message; or poor trade practices in your supplier market; or having your product violated and the market flooded with dangerous counterfeits. Or poor labor practices or community relations.
These are all critical issues for successful and emerging companies to face. Brand value, though it may not show up in the balance sheet, does truly show up in sales growth, margin and share holder value. It also shows up in your market momentum as partners want to stock YOUR product - or not - and as word of mouth marketing places, you’re in or out, hot or not, now or so yesterday. The myth of the later majority in adoption of products can be just that for so many industries, as well. You never get there since you are so yesterday. Brand value shows up in things like getting the best college graduates who want to work in your kind of firm (Amazon vs. Sears).
These are day to day risks that companies are facing, sins of commission, or omission due to their own lack of attention to more subtle risk factors, that can come crashing in, as the protesters line up out side your store.
It is not just the retail brands that suffer these problems.
The problem is even more challenging for mining, petroleum, lumber firms.
Take British Petroleum’s (BP) effort to brand themselves as Beyond Petroleum…this is a great concept, but you have to be an extraordinary visionary, truly courageous (to stop your old ways) and execute well. One employee dumping toxic stuff can ruin your best efforts.
Then there are the complexities for a firm like this of trying to serve an energy hungry planet.… New pipelines are not popular right now, from Massachusetts to Baku.
You can get branded as a polluter, and, at minimum, spend millions on PR, but much worse, have your projects tied up in litigation for years, or even stopped.
Serious attention has to be paid to the challenges associated with globalization and the impact your practices overseas may have in your markets.
Do you actually know where the goods came from, and who is manufacturing them?
Are these people paid a living wage?
Once you provide your drawing to the middleman, you may be surprise at how well the counterfeiter copied your designs.
Recently our company spent the day with Paul Fox from P&G at our customer conference in Bermuda who is also the Chairman on the Coalition Against Counterfeiting and Piracy (CACP). His impassioned message to us all on the risks associated with these issues is a critical thought process for enterprise today. Imagine someone dying from taking what they thought was your Vitamin pill? So, has your firm put in place methods to protect against counterfeiters? Can you audit and control your supply chain to protect again pirates?
When new projects and programs are contemplated, very little time and effort is spent on the risk assessment of these efforts. What type of governance will be put in place to ensure community as well as process best practices? Some companies are trying really hard to make these changes, while others are merely marketing. Huge dollars are spent on lobbyists and apologists, but there is very little proactive Risk Management for all aspects of product brands and corporate reputation protection.
So as your firm thinks thru the new role for the Risk Manager, think brand.