The last thing a business wants to think about is failure, but the very definition of “risk” is understanding that a decision or action could potentially lead to tarnished customer relationships, lower profits, and a loss in shareholder value. Risk is an inevitable part of running a business that’s aiming for success in a competitive digital market, where internal and external factors— sometimes outside of a company’s control—are constantly at play.
Since there is no way around risk, strategic risk management should be an integral part of your communications strategy to help make proactive decisions and avoid potential crises. Understand what strategic risk management is and the available software solutions out there that can help ensure your business mitigates risk as much as possible. In fact, according to one study of companies that are able to reduce the time and costs associated with risk, those that take proactive action manage to grow shareholder value by 20 percent while those that exercise reactive communications see a 30 percent decline in shareholder value.
What is Risk Management?
According to TechTarget, risk management is “the process of identifying, assessing, and controlling threats to an organization’s capital and earnings.” These risks can be from a variety of sources, such as cybersecurity flaws, management errors, lawsuits, etc. From a communications perspective, controlling risk is related to how well a company understands how influence and information spread online, and the ability to align teams around a plan of action when these two behave unexpectedly. When planning events, organizing a new product launch, or running a social media campaign, communications teams need to quickly assess how digital communities embrace, co-opt, reject, or otherwise respond to your message in order to avoid reputation damage and value loss.
Why Risk Management Matters for Communications Teams
Today, organizations are up against new challenges and digital forces and online mechanics. Once a message about your business is shared and amplified online— whether true or not— reactively responding costs your communications team time and money, with no guarantee of a full recovery. With an active risk management strategy, your communications team can make proactive decisions about how to communicate or respond to external audiences, which leads to:
- Consistent, updated information that can contribute to business decisions and response methods
- Less time and money wasted on crisis response or unexpected surprises
- Positive results from communication campaign efforts
Strategic risk management essentially helps answer these important questions when formulating a communications campaign:
- Is there something that can go wrong?
- What is the likelihood of something happening or going wrong?
- Is there something I can do to prevent or avoid this problem?
These same questions can be applied when analyzing current trends and the news cycle. How your business communicates to the public matters, but evaluating what others are saying about your organization is just as important since risk may also develop from actions outside of your control. For instance, misinformation and disinformation about a company is another possibility that, if not anticipated or handled, could lead to profit loss and time spent on crisis response.
Overall, risk management allows professional communicators to identify potential risks that may arise, how to prevent those risks from becoming reality, and how to reduce the impact if those risks occur. Risk management matters, because your communications team is often tasked with shaping your company’s reputation; proactively mitigating risk can help these professionals adapt to changing news trends and conduct better campaigns that address or anticipate potential pushback.
A business with low reputational risk is able to better maintain a positive reputation and hold the support of stakeholders and customers— the parties that determine whether or not your business will flourish. Strategic risk management is an ongoing process that can be adjusted over time and applied to all communication initiatives. Shared below are important risk management steps and software solutions your communications team can use to proactively mitigate risk and get ahead of a communications crisis:
Collaborate and Establish Expectations
Identify and receive insight from all parties who would need to know about your action plan should a risk have potential or escalate. There will be more support for your risk management plan when internal and external stakeholders are informed and contribute to decisions that help guarantee the success of the company over the long term. By having different perspectives and allowing others to become part of the risk planning process, there will be a better guarantee of prompt reaction time and cooperation when risk prevention is needed. Since business communicators set the tone for how the company communicates internally and externally, the same will hold true for your risk management planning. The actions that are agreed on and decided for the risk management plan will be reflected in the overall company culture and risk management policy. With that in mind, it’s important for your communications team to take this planning time seriously by setting clear objectives and establishing guidelines for how to recognize and respond to risks.
Analyze and Monitor the Risks
Since risk is the possibility of an event that hasn’t happened yet, having a strategic method of what to do and when (backed by supporting data) can prove challenging. Checking records of past risk response, observing competitor behavior, and tracking current trends are just a few of the methods every business communicator should do to gauge what qualifies as a potential risk.
Thankfully, there are available risk management software solutions that can do this work for you. Each software solution offers features that are tailored to different needs, industries, and expectations for how to track and flag risk through every stage of a business campaign or initiative:
- Yonder offers risk intelligence, which allows your business to receive alerts about online conversations that have the potential to become viral and impact your reputation and bottom line. Through this software, you can receive updates and organized reports about groups targeting and narratives targeting your business, so you can create a strategy to respond.
- Resolver is a tool that focuses on risk planning and preparation. You can organize tasks by objectives and stages, and the software offers customizable options for specific industries (e.g. airlines, finance, etc.).
- Reciprocity is a user-friendly option that allows you to create automated alerts for team members as well as key stakeholders who need to be notified of upcoming business news and trends. This software is basic and could be described as a good option when you’re looking for an option without too many parts.
Analyzing risk revolves around a clear understanding of what that potential risk could be early on. With this risk assessment, an estimate of the probability and impact of particular risks can then be evaluated, allowing you to set a plan of action and deduce whether each risk is of high or low priority. With so many campaigns taking place, organizing all initiatives in a table or matrix — with an explanation of the risks, the likelihood of their impact, and a plan of action for each — will help your communications team understand their responsibility around risk prevention and response at every stage. As new events, incidents, or demands occur, you will want to consistently update and reevaluate whether the existing risk management strategies are adequate or have room for improvement.
So, how do you calculate whether a risk is of high or low priority? This will depend on what matters to key stakeholders and involved parties, as well as the consequences if the risk at hand were to become reality. For example, risks could be prioritized by estimated mitigation costs, the number of steps or resources required to take action, or how likely the risk will occur. There are several indicators that would take more time to measure or evaluate, but incorporating them into the corporate risk policy and explicitly stating these factors as risk qualifiers will ensure your communications team (and the business as a whole) is aligned on what counts as a risk.
Address the Risks and Respond
Part of strategic risk management is deciding when or how to respond to each risk, then preparing and implementing an action strategy. The ultimate goal is to avoid the risk altogether, but in the event that the risk is likely to occur, it’s helpful to keep in mind that the chosen plan of action should:
- Reduce the likelihood of the potential risk
- Reduce the impact of the risk
- Assign responsibility to the appropriate parties
There may even be an instance where taking no action or response is the best decision to ensure the risk does not have severe impact or continue to escalate. For example, if a company executive is suddenly trending on social media, there are available software solutions that can help your communications team track where the conversation started and why it’s taking place to determine whether it’s in the company’s interest to engage with or avoid a potentially hostile situation.
Review Results and Adjust
Strategic risk management is not a one-time process. Your communications team will want to regularly review current methods to set new objectives and continually adjust the strategy to anticipate new risks.
As you create and tweak your risk management strategy, you will want to avoid the common mistakes that lead to potential risks being overlooked:
- Key stakeholders, managers, and other parties are not informed or do not support the risk strategy
- There is not enough time placed into research and resources to fully implement the strategy
- Low priority risks that are easy to solve are focused on, while more serious risks go unnoticed
- Strategy plans are not updated as risks evolve, new risks arrive, or as past risks are no longer of concern
How Yonder Can Help Your Risk Management Strategy
The risk management tools you use influence how well your communications team can plan, analyze, and respond to risks. With Yonder, your communications team can gain insight into what is being said about the company, who is starting the conversation, and trending topics that could impact corporate decisions and policies.
Once your communication team tracks the potential risks, they can determine what sort of influence those actions could have on your company’s reputation, thereby evaluating whether each risk deserves time and attention. By catching a problem early on, business communication professionals can save money and resources that would otherwise have been spent on an escalated situation or a large-scale crisis.
To confirm the risk level of a trending theme or online discussion, Yonder identifies the authenticity of those conversations to establish the impact, severity, and best course of action. With the information provided, your team can track online conversations and refer to the risk management strategy to determine the best way to avoid or mitigate company risk.
Assessing the potential risks your company might encounter is a proactive, ongoing endeavor that could save you from having to spend money and countless hours on a full-blown communications crisis. By implementing a thorough strategy backed by insights from reputable risk management software solutions, communication teams can be proactive now to prevent or lessen the severity of risks, instead of taking a more reactive approach and dealing with greater losses.