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The Wall Street Journal has an interesting piece about the importance of preserving and nurturing brand equity by protecting a company’s reputation.

“To a large extent,” the Journal writes, “many companies are defined by their reputations. A good reputation and a strong brand allow companies to stand out in crowded markets ... Reputational risk is therefore one of the most potent dangers that any company faces. It is also, unfortunately, one of the most elusive. While it is relatively easy to talk about reputation risk in the abstract, it is far harder to protect against it in practice. A recent survey conducted by Airmic, the association for insurance and risk managers, frames the conundrum well. Of those who took part in the poll, 80% claimed that reputational risk is their top concern. However, only 43% believed that they have formal and well-managed plans in place to tackle it.

“The problem is clear: It is easy to identify and measure the impact of the damage wrought to a reputation after a crisis. But it is far more difficult to predict when and – more importantly – how a reputation might be tarnished in the future.”
KC's View:
I’ve always thought that companies ought to make an effort to put someone at the table whose job it is not to drink the Kool-Aid, to see the company from outside perspectives. It is sort of what many newspapers have done in hiring ombudsmen or public editors, who are charged with casting a critical eye on every story, representing readers’ perspectives.

The biggest reputational risk, it seems to me, is living in a vacuum, becoming isolated, not connecting with customers, employees and fundamental ways. (This applies not just to business, but to almost every institution.) It is, to use a phrase that we like a lot around here, “breathing your own exhaust.”