Reputational Risk in the Age of Social Media

[Music] the great I know I know thank you so such a wonderful intro you're the great one here so I really appreciate that introduction and thank you all for joining us and use well Russell and um uh also I I think you can on the on the topic of uh reputational risk and also how much reputation matters we had farad talking head who attracted a large audience so image really does matter yes and you know to that point you know we see that on social media as well where an image can make or break someone instantly the same applies to corporations how about you start us off there in terms of how important is reputation and what is the impact for companies when it goes good or bad well reputation I think we can all admit is everything um there's always Goodwill built into any m&a transaction which basically shows the value beyond the numbers and usually that's attributed to reputation um and so having a having a strong reputation is incredibly important uh my firm prosc Partners focuses on the financial services industry we've seen a real shift where firms are whether it be a private Equity Firm or a hedge fund or a large scale asset managers really thinking about their reputation and they're doing it for reasons because they know it drives business impact we talk about this thing called deals Capital people right you want a good reputation to help you in the marketplace to raise Capital you want a good reputation in the marketplace to help you attract deal flow and you want a good reputation in the market to help you attract the best and most talented people and we've seen the negative sides of that you know for example with um BP when it comes to environmental issues or Volkswagen recently also Boeing as well you know when it comes to safety we've seen uh stocks take a dive and to you like when you're managing you know this type of uh crisis what's the the most important thing to you and I would say what is the first step that you take in mitigating such a crisis I think the first step is to get your arms around a situation right understand just how large it could potentially be I mean I think our knee-jerk reaction in a crisis situation is to just try to sweep it under the rug or try to get Beyond it what you want to Pro event happening is a multiple stage news cycle that's going to hurt you over the long term the news cycle is incredibly fast if you have one day of bad news that's okay we can all get through that but if the story goes on in multiple days that's when it really becomes an issue so be careful about getting out in front of something or saying something right away that might prove to be false or you try to minimize a situation and then before you know it it a week later it spread and there's contagion so I think that's really the the first goal is just get your before you do anything just try to understand what's going on as I said the news cycle is incredibly fast it might blow right past you um but if you make the wrong Steps early on it may be a second third fourth story that can last weeks months or even years just in terms of like a how-to guide what would be that very first step like does it start when the incident happens like what's your uh first reaction I think it I think it depends what the incident is you mentioned Boeing you know that's something that has to do with safety and consumers and you have constant you know you have a inflow of customers who are wondering are they safe or are they not right so that's that's a little bit different than a BTO B situation which may just be a a reputation I think in any case you certainly want to acknowledge what happened um you want to express sympathy in the event that that's appropriate but then it's about getting your arms around the situation trying to understand how big it is how small it is making sure you're talking to all your stakeholders and I think a lot about constituencies and conduits right who are the constituencies I care about are they my customers are they my employees are they shareholders if it's a publicly traded company and what are the best conduits to reach those individuals is it a letter from the CEO is it something on social media do we want to approach someone like you to hopefully you know tell our story in the National so there's lots of different tactics you can use when an issue develops but you have to be thoughtful about all right who are the constituents I care about and what's the most effective way to reach them and on that note of you being on the reporter side of things so how important is it to be transparent but at the same time fulfill your role of protecting information when a company is in this type of situation because what I would be doing is asking as many questions as I can to get you know to speak truth to power but then it's a delicate dense and I wonder how you deal with it yeah for those that aren't in it every day there is this dance going on between reporters and uh Executives and public relations folks um and I think you just have to be careful if you're in a company or Corporation about how much you obviously want to be forthright um but you don't want to create news where it's not necessary that was my my point of sort of getting your arms around the situation as quickly as you as as you can certainly you want to be truthful certainly you want to be transparent but at the same time you don't want to start introducing things that are going to prolong that new cycle when you don't really know what it could look like down down the road so helpful um but sometimes you got to be helpful but uninformative when you're when you're interacting definitely I think um a point that you alluded to as well is that it's also the bigger picture it's you know the relationship you know between public relations side and also journalist of knowing what the the overall reputation of a company is a multifaceted side so that is not only the information that we have about them like information isn't only released when uh you know something bad happens so for example what how do you antic how do you prepare for that for example by reaching out to journalists by having certain types of conversation how do you give that more uh broader image so that it's not just the incident that journalist are talking we talk a lot about in sports right the the old saying the best defense is a good offense and I think it's very important for companies especially in the financial services industry in in fintech to really understand what your brand is and then get out there and tell your story you know Google's a vacuum um if you don't if you have nothing out there about your company and you have a bad story develop the only thing that people are going to see when they Google you is that negative story so I I talk a lot about brand insulation insulating your brand in the event that something bad could happen down the line right and so I think that's what you want to always be thinking about how can we proactively tell our story make sure that there's this basis this base of knowledge about who we are and and what we do and how we do it and then that can take the shape of all sorts of different things it could be a thought leader it could be executive visibility it could be content that you put out on a regular basis that gives people an understanding of who you are and what you stand for exactly so like the character isn't just you know the one inent like they it's almost having a relationship with a company of understanding what it's about thought leadership from speakers to things like that so that yeah they're engaging with more than just you know this one uh negative information that might have leaked out or something at the time and does that differ for example in different Industries uh you know you represent a variety of you know clients from energy companies to you know uh Equity uh um you know companies in fintech as well particularly today as it's more variable it's unknown and I think more of a Target I think when you know big shifts happen how would you address uh does it operate differently in terms of how well I I do I think it and it has it goes back to those stakeholders who are your stakeholders and and what your audience yeah what do you need to to talk about but I'll tell you in financial services in particular there has been a dramatic shift from the financial crisis in 2009 all the way through to where we are today um where firms realized that if they were not being proactive if they were not telling their story there was a pretty good chance that someone else was going to tell it for them and that they were going to get run over and I don't think that a you know being secretive or you know it wasn't benefiting anyone the media was certainly skeptical Regulators were certainly skeptical so I mean people remember back in the day if you went on a hedge fund website it just said log in or go away right they wanted nothing to do with anyone sort of coming in now you go you see the executive photos you see a a mission statement you see all the things that make up the hedge fund or the private Equity Firm or what have you because they want to be out there they want to tell their story so there's been a dramatic shift you know I was at be Stern so I I you know I I've had quite the crisis experience in my in my lifetime I started as a reporter I went to beay and I was at beay in 2008 when everything went South um so I think that was a real turning point because I think everyone realized that you have to be very proactive on a constant basis now sometimes I don't care how strong your brand is we had a pretty strong brand at be Sterns and without the regulatory protection and you there was nothing that was going to prevent a run on the bank which is what what ultimately happened same thing with Silicon Valley Bank just a couple years ago so you'll be in those situations where it will happen but I do think 2009 with was a real turning point for a lot of companies saying hey we need to establish our presence who we are proactively so that we're not just swept in by the title wave of negative news that could come at us yeah just re reiterating um what from what I believe you're saying about being proactive is that it doesn't start when the crisis happens it's years before it's a reputation you've built it's the understanding that you've communicated to The Wider public about what the company stands for and is absolutely again it's that brand ins a there's also some prep work every company should be doing around crisis I mean areas where you can get into trouble they differ but they all sort of fall into the same buckets right it was a bad performance was there a bad product did an executive go Rogue and if you sort of think ahead of time okay these are my buckets of vulnerability how do I want to prepare for those and what steps do I want to take to be ready for it right I think it was Eisenhower who said plans are useless but planning is essential so you just want to have the plan and you know the planning process in place so that you know if something happens okay this is our first step this is who we call you're not going to know all the intricacies of a negative situation but you are going to have at least a road map to take you from the crisis to the recovery exactly you're not going to be able to solve everything but it's about you know uh trying to do as much as you can and taking the early steps to be able to to do the best job possible in that sense and final question since we're nearly out of time but given that we are in Abu Dhabi in the Middle East the capital of capital you know as a the event is tag lined can you discuss does that differ in the region because I would imagine cultural aspects and uh the way business is done and perceptions differs from one region to to the next absolutely could you speak on that a bit about how it yeah I mean I I I think it goes back to that identifying the constituencies and the stakeholders that really matter and then what are the Norms in that in that in that region um you know Financial Services in New York uh is very similar to here but there are differences right in terms of how relationships are built what the regulatory environment looks like and a number of other factors so you better well understand what that is like if you're going to operate as you can imagine we have a lot of our clients in the United States now opening Offices here and in the rest of the GCC and I think that I think it's very important that they understand we opened an office here right I think it's very important that people understand what it is you know what the differences are in the region and how you can be successful in that region because it is not as you point out the same as it might be in New York definitely and I think like on the ground presence face Toof face you know communication that is something that translates you know very well here uh you know versus by email or by phone and things like that so that is one approach yeah I think being on the ground having those conversations developing relationships with the reporters which I think is is is is really important for my job I mean the under understanding who the reporters are what they do what they cover um is is imperative I have a podcast called press profiles where I actually sit down with reporters and interview them about their career because I think anyone in my position any executive that's going to do an interview with a reporter should really know what makes them tick and and what their background is we did a great one with your colleague Mina uh uh press profiles interview so um I think it's really important to understand the landscape understand the reporter and understand the levers you can pull to tell your story in an effective way and it's different all over the world definitely thank you so much I know I've learned a lot of information to walk away with so I really appreciate it and thank you all for listening my pleasure [Music]