Risky Business: How to Safe Guard Your Brand

Over 80% of the Fortune 500 Company CEO’s identified ‘their brand’ as their company’s number one asset. Their brand was valued as being what defined their business and what made them unique in their market.


Your brand is what sets you apart from your competition. It is the differentiating factor used by your consumer’s in their decision making process.


In our home lives we tend to take great care of our valuable assets. We try to preempt things that can go wrong and insure against them. Not only is your car insured against any potential accidents, you also wear your seat belt, maintain the speed limits, drive with care. You try to identify and reduce potential risks before they occur. If your brand is the greatest asset to your business then what measures have you put in place to protect it from potential risks?



Brand Risks

Brands face exposure to a huge amount of risk (product or service), many of which will be specific to each individual brand, not to mention industry categories or specific sectors, be they B2B or B2C. In addition to the obvious risks faced from product liability lawsuits or adverse regulatory decisions, other risks your brand could face include:


Costa Concordia Runs Aground 600px


Structural Risk

These are risks where exposure might affect an entire industry or market segment. The sinking of the luxury cruise liner Costa Concordia may have destroyed the reputation of its parent brand Carnival Corporation but it also damaged the entire industry with numerous cruise liner brands suffering the effects


Brand Equity Risk

Brand Equity risks undermine your brand’s ability to maintain desired differentiation and competitive advantage. If your brand identity is the only thing that differs your offering from that of your competitors then the loss of brand affinity by consumers will affect your entire business.


Reputational Risk

These risks arise from failure to meet basic expectations that apply to the market in which your company operates.


The famous case of Tylenol is a textbook example of how brand risk management can save the reputation of a company and lead to stronger brand loyalty. When faced with a case of product tampering that would de-rail most brands, Tylenol’s excellent foresight about risk enabled them to rapidly implement pre-planned re-packaging that preserved the company’s reputation.


 Tylenol 600px


Why Brand Risk Management is Important


A brand is so much more than a name. The value of a brand lies in the unique emotional and functional benefits it offers its target audience. Often the biggest brand risk is not about new competitors coming to the market, it is about loosing the trust and connection it has with its consumers.


Strong well-known brands that are poorly managed can lose their distinction in the market place. Their products or services simply become commodities distinguished only by price. The brand name might prevail but the value of the brand erodes; market share, profit margins, and loyalty all decline. In essence, the power of the brand is lost.


The risk of a damaged brand is far more dangerous and costly to a business than risks to tangible assets. A factory destroyed by fire can be replaced with financial investment. A brand with a damaged reputation takes far more investment to repair and in some cases is too damaged and needs complete rebranding. It also becomes a lasting case study in how “not-to-do-it” with is an irreparable legacy association.


Rebuilding a brand’s reputation takes much more than just money. Changes in stakeholder perceptions can threaten the sustainability of current and future demand for a company’s product or services.  A risk to brand equity is a risk to a brand’s ability to create value or influence in its market, in short its ability to generate a profitable return.



Are You Brand Risk Aware?

Managing brand risk is really about running the business effectively and understanding, at the core, the fundamental risks facing the business.


Safe guarding your brand from potential risks must begin by developing a clear understanding of the value of the brand to the business. By clearly illustrating the brand’s contribution to earnings, you can gain perspective and properly assess the scale and nature of the risks attached to the brand. 


When unanticipated change occurs brands can be hit hard because typical crisis management does not include appropriate brand risk management strategies too. If you have spent time and resources to shape and build strong brand equity then you need to protect your investment and manage your brand’s future. Your brand strategy should also include mitigating potential risks to your brand too. Be proactive, preempt, plan, and safe guard your company’s revenue stream.


• Identifying and evaluating the existing practices and procedures that are used to develop, support and track brand performance will help identify potential risks that may contribute to brand erosion. Have you undertaken a brand audit?


• Have you identified the risks faced by your brand?


• Do you know what your stakeholders expect from you?


• Have you a contingency plan in place to protect your brand?



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