Part 3: Reputational Risks for IT Professionals
Given the financial and legal exposures IT companies face, you might be surprised to learn that, in a recent study conducted by insurance company ACE European Group,
more than four-fifths of businesses interviewed (81 percent) cited reputational risks as their most difficult to manage. Translation: the majority of companies see threats to their reputation as tougher to handle than threats to their income, property,
or information security.
That's pretty significant. What's even more telling, though, is the reasons the surveyed companies gave for counting their reputational risk among their hardest to handle:
- 77 percent said they had trouble assessing the financial value of their reputation. In other words, they don't know what their good name is worth and so don't know how much to invest in protecting it.
- 68 percent said they didn't know where to turn for reliable guidance about managing their reputational risks.
- 66 percent admitted to feeling overexposed to reputational risk from an insurance perspective.
- 56 percent said they feared (but didn't fully understand) the threats to their reputation that social networks and other forms of social media presented.
So how can IT professionals protect their most valuable asset? There are two major ways.
Reputation Protection Strategy 1: Contracts, Communication, Listening
Reputation management starts with communication. The more clearly you communicate with clients, business partners, and others, the less likely you are to be the target of a lawsuit or other event that can tarnish your hard-won reputation. For an IT business,
communication typically means…
- Using thorough contracts. Setting clear guidelines at the start of a project can help prevent disappointment (and E&O lawsuits alleging negligence) down the road.
- Checking in often with clients. Communicating any plan changes, project challenges, or other important points as they happen can prevent unpleasant customer surprises (and lawsuits).
- Monitoring the conversation online. Social media search functions and alerts make it easy to keep track of what people are saying about your business online. Keep an eye on unhappy (or really happy) customers, listen to what they're
saying, and engage with them when possible. Many potential blowups can be prevented by demonstrating that you care about your customers and are genuinely willing to help them.
Reputation Protection Strategy 2: Business Insurance
The ACE study's finding that business owners are super-focused on protecting their reputation highlights a reality of the Internet age: in an information- and advertising-saturated world, it's often the opinions of our friends and family that
carry the most weight. These opinions (and the way they're expressed on social networks and through word-of-mouth communication) can significantly influence a person's decision to work with a given company, whether or not those opinions
are based in facts.
In other words: what your potential customers think about your business is vitally important to your ability to win them over.
Imagine, then, that you're hit with a lawsuit claiming that you lifted code from an existing application or piece of software. Or that one of your clients is victimized by a massive data breach and claims it was your business's shoddy network
installation that allowed the breach to happen.
Even if you aren't actually at fault in either situation, chatter on social media sites or coverage on news outlets is enough to seriously batter your reputation, forever linking your business to subpar service in your potential clients' minds.
E and O Insurance helps you manage that risk by giving you the financial muscle necessary to nip negativity in the bud and take control of the
conversation about your business. In the third part of this eBook, we'll delve into how E&O Insurance works in more detail.
Next: Chapter 2: Managing Risk as an IT Professional