Defending a brand: What's in a name? A crisis will tell

While the web has reduced from days to minutes the time in which a corporate reputation can be attacked on a global scale, companies trying to protect their brands must also face the fact that the public remains cynical about the motives of organisations in both state and private sectors.

"There's been an increasing drop in corporate and government trust and at the same time an increase in the corrosive effect of cynicism," says Mike Seymour, head of international issues and crisis management at Edelman, the corporate communications consultancy. He believes this cynicism makes it harder for companies battling through a product recall or a transport disaster to persuade public, investors and media they are doing the right thing.

All the more reason, say the experts, to ensure mechanisms are in place to avert a crisis or, once an event has happened, to minimise the havoc it can wreak on a corporation's reputation.

Early detection is crucial. Looking at the smallest events - such as customer complaints - as potential risks can ensure a problem does not escalate. into something more serious. This includes measures such as training staff in call centres on how to handle difficult customers and, when their efforts fail, to alert their supervisors.

"In the past, reputation risk or reputation as a whole has fallen between corporate communications and risk management," says Peter Pender-Cutlip, a director of Kroll's business intelligence and investigations practice. "The idea is to try and bridge that gap."

No amount of early detection, however, can prevent brands being damaged by unforeseen events. In 1999, for example, Coca-Cola Beverages, suffered one of the corporate world's worst health crises when a number of consumers became sick after drinking Coke in Belgium, France and other European countries. Drinks were pulled off the shelves for 10 days as a result.

In such cases, the cost to the company extends far beyond spending to manage the crisis, because once lost, a corporate reputation is hard to rebuild. Nike, which suffered a big reputational crisis after activists claimed it was running sweatshops in Asia, is still trying to shake off that image, despite the fact that it is now an acknowledged leader in managing labour conditions in its supply chain.

Experts stress that a swift response to any crisis can minimise the damage. Companies cannot afford to wait before releasing information to the public. "You have to be prepared to communicate before you have all the facts," says Karen Doyne, managing director of crisis communications at Burson-Marsteller. "Because the public and media's need for information outstrips the available data. That creates an information vacuum and into that flows speculation and alarm."

Often cited as an example of how a speedy response can avert a reputational crisis is the 1989 Kegworth air disaster in which a British Midland Airways jet crashed near the UK's East Midlands airport. In a series of TV and radio interviews, Sir Michael Bishop, the airline's chief executive, immediately addressed the scale of the disaster and answered questions from the public and investors.

To prepare companies for managing "the golden hours" - the crucial first few hours after a crisis has hit - Edelman, like other consultancies, runs extensive crisis simulations that can even involve actors. Participants play everything from members of the public who have been affected by the mock event to journalists asking difficult questions of senior management.

Television and radio interviews are conducted and staff can review and analyse their performance in this respect. "It's a form of loose theatre," says Mr Seymour. "But you can't script the whole thing because you can never anticipate how people are going to perform."

Simulations range from these extensive action-based events to table-top versions. But before any such tests take place, a plan needs to be established. This involves making an assessment of the threats a company might face and assigning responsibilities to appropriate teams so that everyone is aware of their role in a crisis. And plans need updating regularly.

"Employees change, science changes, NGOs change," says Mr Seymour. "Unless you regularly update them, you've got old plans before you even set out."

Most important, however, is commitment at board level to protecting a reputation, something Mr Pender-Cutlip believes is on the rise. "Reputation has always been recognised as an important asset," he says. "But you've had established global brands being knocked sideways, and in some cases destroyed. So recent events are concentrating minds in the boardroom and boards are now taking a more active role."

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