WEBINAR REPLAY – Reputational Risk Categories: A New Framework for Crisis Planning in the Food and Agriculture Industry

 

 

Developing a comprehensive crisis plan can often feel like trying to boil the ocean.

 

Communicators and executive leadership are known for staying awake at night thinking about the number of worst-case scenarios that could damage a company’s business and reputation.

 

And trying to prepare for every scenario can feel overwhelming—if not impossible.

 

Then, when communicators try to prepare an organization for the worst, they oftentimes lose credibility with company leaders who think they sound like Chicken Little crying out that the sky is falling.

 

Company leaders don’t plan for reputational threats the way they do for other business risks – but they should

 

Thorough crisis planning can also be hindered by a company’s culture.

 

Most corporate leaders today like to instill a can-do, optimistic culture, and focusing on the negative, including taking a hard look at a company’s shortcomings, can run counterculture to their ethos of forward-thinking.

 

To avoid losing credibility with company leaders and prepare organizations for very real and potential threats, communicators need to place reputational threats in a framework and language that leaders can understand and that other parts of the business are using.

 

We’ve adapted a model used in the financial sector for risk planning to create a new framework for crisis planning.

 

This new model aligns critical issues for assessing and managing reputational threats

The framework places reputational threats into three distinct categories:

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Let’s take a look at each type of threat more closely.

 

1. Preventable Threats

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Preventable threats are threats that companies should have a zero-tolerance policy for. They are threats that come from the company and generate no strategic benefit.

 

A food recall would be an example of this in the food industry space.

 

All food processing facilities should have rigorous safety protocols in place to prevent issues related to foodborne illnesses.

 

Blue Bell experienced the pains of not having rigorous enough standards in place when a 2015 outbreak of listeria–one of the deadliest food borne pathogens, responsible for approximately 260 deaths a year and 1,600 illnesses, according to The Centers for Disease Control and Prevention–resulted in three people dying and others becoming ill.

 

Blue Bell pulled its products from stores and has since put in place more robust testing procedures to avoid any future missteps.

 

Consumers expect that you will meet your promises, and whether you like it or not, will hold you to it.

 

Threats that are within your control are preventable, and companies should have a zero-tolerance policy for mistakes made in this category.

 

2. Strategic Threats

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Strategic threats are threats that a company chooses to take for significant investment return—they improve the overall value of the business. But there is a risk associated with them.

 

For example, consumers today increasingly want to buy foods labeled “organic,” and food companies have shifted their labeling and in some cases supply chain sources to meet the growing market demand.

 

But being labeled organic doesn’t necessarily mean “safe,” as consumers realized recently through Chipotle’s foodborne illness scandal.

 

Chipotle made the strategic decision to position itself as a healthy fast-food chain that promised to deliver high-quality, sustainably sourced food. To meet that brand promise, they sourced their food from local, organic farms.

 

It was a strategic risk with a huge upside

 

The only problem, though, was that some of the farms didn’t have the safety protocols in place to prevent foodborne bacteria. And more recently, it came to light that not all of its employees were following the right safety protocols.

 

At best, Chipotle knew the risk they were taking and righted the course after the food illness outbreaks occurred (more than 500 cases of E-Coli illness in total). At worst, they completely ignored the strategic risk they were taking (or were in denial that it was a strategic risk), and instead prioritized their marketing efforts while being unprepared for the what-ifs.

 

At the end of the day, more than 500 people fell ill in the latter part of 2015 after eating at Chipotle, according to a report by Food Safety News. J.P. Morgan estimated that Chipotle will have lost three years of earnings between fiscal year 2014 and fiscal year 2017 as a direct consequence of the outbreaks.

 

Strategic threats can have great upside value but companies need to be prepared for the downsides and ready to explain and defend their decisions as the impact can be severe.

 

Ultimately, if you can’t explain the decision you’ve made to consumers or know that it would go over like a lead balloon (e.g., you made a strategic business decision that put people’s health at risk), you should reconsider making the decision in the first place.

 

3. External Threats

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Finally, there are external threats, which are threats that are external to a business, out of your control and happen “to” you.

 

Good examples would be an active shooter entering a large restaurant chain and holding people hostage, a hurricane that rips through a company’s facilities or a new, unknown bacteria (e.g. Mad Cow disease) infects the supply chain.

 

The external reputational threat is that a company’s brand will suffer (e.g., people perceive that your restaurant, campus or food is “unsafe”), which then impacts your bottom line.

 

Unfortunately, there is little companies can do to control these types of scenarios from taking place, but they can be prepared to respond effectively in order to protect the brand and the public’s perception of them.

 

Summary

 

Company leaders recognize the need for crisis planning, but the most common barrier we’ve seen time and again is the vocabulary gap within an organization.

 

When communicators (responsible for the customer experience and expectations) and leaders (responsible for managing food safety) adopt a common vocabulary and framework for clearly understanding the threats and how to manage them, an organization can work together more effectively to prepare for and prevent threats from becoming a reality.

 

Want to discover more about the new framework for crisis planning?

Stay tuned as the next three blog posts will cover all three reputational threats in further detail.

 

Check out other critical moment insights for smart people in our blog archive.

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