Strategies to manage your business’s reputational risk
Fraud doesn’t always mean a direct financial loss. As a small business, experiencing fraud can damage your reputation and credibility.
Reputational risk is a threat to the brand of your business. Usually due to an event that causes negative public perception or bad publicity. In recent years, one of the biggest reputational risks that businesses have faced is the risk of fraud or a data breach.
How to avoid data breaches
In the last few years almost everything you need to be in business is either stored or accessed online. From online banking to buying products, customer credit card details, employee records, accounting software data, processing orders, storing customer addresses, social media and everything else in between.
With so much information online or in the cloud, there is a greater risk for a data breach or direct attack to your business.
There are two main types of attacks:
- Anonymous: Viruses, trojans, worms and malware are nondescript in their targets, they don’t care who they harm. They cause havoc by crashing systems and using valuable resources to fix and recover what you may have lost.
- Targeted: Your business is targeted directly by a hacker, phishing site, or emails that rely upon social engineering to further their causes, asking you to pay funds, share customer data or pretend to be an existing customer or supplier.
As the business owner you have a responsibility to protect your customer’s data. And many of the things you can do to protect yourself are similar to what you’d do as a consumer.
To protect against the risk of a breach:
- Automatically back up data to hosted cloud servers daily.
- Never use public wi-fi with work laptops or mobile devices.
- Always use secure sites, https rather than http.
- Install spam and antivirus software to protect your technology.
- Create an IT security policy and training for employees.
- Use password management software so passwords are regularly updated.
- Use two-factor authentication when logging into accounts.
How to manage reputational risk within your business
Often, some reputational risk feels like it’s outside of your control. For example, if a customer complains publicly on social media or writes a bad review. Consider these additional items when assessing your business’s reputational risk and put controls in place to help protect your business and minimize impact.
1. Customer service
Make sure you have customer service training for all your employees to ensure they understand the importance of professionally (and successfully) dealing with complaints.
2. Hiring process
Background checks and other pre-employment checks are a smart step to include in your hiring process.
3. Communication plan
If something does go wrong, you need to be prepared to respond quickly. Having a crisis communication plan specifically for your business is essential. It could be as simple as having a list of all potential risks with your planned response to address them listed.
A more detailed communication plan could entail:
- Creating a Disaster Recovery Plan (DRP) that documents what could happen, how your business will respond and the processes that must be followed to achieve disaster recovery.
- Identifying the roles and responsibilities that team members will have to perform.
Without effective risk and reputation management, it may take your small business more time to recover from everything from fraud to customer complaints. Your reputation is one of your most important assets, so take steps now to protect it.