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Oct. 4, 2012 /PRNewswire/ -- When examining the dynamic between corporate reputation and financial performance, it is important to study the effects of large-scale crises, whether manmade or driven by external forces. Events such as the
Japan tsunami and earthquake as well as various accounting scandals, have caused many organizations to lose value, according to the Aon-sponsored
Reputation Review 2012 report recently issued by
Oxford Metrica, an independent analytics and advisory firm. Seven of 10 companies measured in the report that were impacted by
disasters in 2011 lost more than one-third of their value and two companies lost almost 90 percent.
"While the principles of reputation recovery are made more vivid by crisis, they apply equally to lesser events that can still damage a company's reputation," said
Randy Nornes, executive vice president with
Aon Risk Solutions, the global
risk management business of
Aon plc (NYSE: AON). "Last year's research revealed that 80 percent of firms will lose 20 percent of their value once every five years due to reputational issues. Any company – no matter its size – can mitigate the risks of an event by taking a positive and thoughtful approach to
crisis management. Supply chain risk is often the catalyst for crises, so this can be a great place to start the process."
business interruption to customer service and quality control, organizations have quickly learned to appreciate the volatility that can stem from a poorly managed supply chain," added
Dr. Deborah Pretty, principal of Oxford Metrica.
A coherent reputation strategy can be the difference between recovery and failure for many companies. It can minimize the likelihood of a critical event turning into a reputation crisis and will maximize the probability of recovery. Those that have a firm grip on their brand and are actively monitoring it can more easily weather a crisis. In fact, the research shows that companies that successfully navigate a crisis can actually build additional value.