"Significant Business Incidents: A Strategic Guide to Safeguarding Your Business Reputation and Trust"

In this short series of articles, I aim to share insights, strategies, and tools garnered from the frontline of critical incident management, bridging the gap between the worlds of policing and business leadership.

Over the course of a 30-year career in senior-level policing in the UK, I had the privilege and responsibility of commanding critical incidents in a strategic capacity. These incidents ranged from volatile or ambiguous situations with threats to life, to those that, unfortunately, proved to be fatal. Through these experiences, I learned invaluable lessons in crisis management, relationship management, planning and co-ordination, effective decision-making, and of paramount importance, the safeguarding of public confidence and trust.

Now, as I transition into the business world, I carry with me the weight of these experiences and the dedication to applying those hard-earned lessons to protect and enhance business reputations and stakeholder trust.

This series of articles provide the basis for learning on our business leadership course "Strategies for Safeguarding Your Business Reputation". Further details are available at Contact – Develop People (develop-people.co.uk).

Mark Stanton - Leadership Advisor & Mentor, The Personal Development People Ltd

Significant Business Incidents (SBI) - Proposed Definition

Throughout my policing career I believed that the service could and should learn from outside of it's own confines. In many cases we did, but in my view, not often enough. Rather than assess good practice from other forces, which creates the danger of learning in an echo chamber, good practice is evident in many other sectors both private and charitable and the learning should be taken where it can.

Now, being on the outside I look at what policing can provide by way of good practice to the wider business community. The following definition of a significant business incident or SBO is proposed. We've formulated it by meticulously reshaping the established definition of a police critical incident and linking it to the unique needs and challenges of the business world.

"A significant business incident (SBI) is any situation where the effective handling of the business response is paramount to safeguarding the business reputation; and ensuring the continuing trust of both current and potential customers/clients/consumers, as well as the broader business community."

At the heart of this lies the definition of a police critical incident – 'any situation where the effectiveness of the police response is likely to have a significant impact on the confidence of the victim, their family, and/or the community' - that emulated from the public inquiry following the investigation into the murder of Stephen Lawrence in 1993. The Stephen Lawrence Inquiry - GOV.UK (www.gov.uk).

Keywords and Definitions in a Business Context:

1. Effective Handling: The skilful management and resolution of the incident in a manner that minimises harm and maintains trust among stakeholders including customers, clients, consumers, and the broader business community.
2. Business Reputation: The overall perception and image of the business in the eyes of its stakeholders, including customers, clients, consumers, and the broader business community.
3. Trust: The confidence and reliance that stakeholders, such as customers, clients, consumers, and the broader business community, have in the business and its actions.
4. Current and Potential Customers/Clients/Consumers: Refers to individuals or entities who are either already engaged with the business or have the potential to become customers, clients, or consumers in the future.
5. Broader Business Community: Encompasses all entities and individuals, including competitors, partners, regulatory bodies, and the general business ecosystem, that interact with or are affected by the business's activities.

Reputational Risks that Affect Businesses in SBI's

There are many different types of reputational risk that can affect a business, depending on the source and nature of the incident. Variation also exists according to the sector or specialism of the business and its accessibility and impact to the wider public. Some examples of reputational incidents that might be considered as significant are:

• Data breaches that expose the personal information and privacy of customers, employees, or partners. This can erode the trust and confidence of the stakeholders and lead to legal actions, fines, or regulatory sanctions. For example, in 2017, Equifax suffered a massive data breach that compromised the personal data of 147 million consumers.
• Unethical or illegal practices that violate the values and standards of the business or the industry. This can damage the reputation and credibility of the business and result in loss of customers, partners, or investors. For example, in 2015, Volkswagen admitted to cheating on emissions tests for millions of diesel vehicles.
• Product or service failures that harm the quality, safety, or performance of the business offerings. This can reduce customer satisfaction and loyalty and affect the competitive advantage of the business. For example, in 2010, Toyota recalled millions of vehicles due to faulty accelerator pedals that caused unintended acceleration.
• Negative publicity or social media backlash that tarnishes the image or brand of the business. This can be caused by internal factors, such as scandals, controversies, or missteps by senior executives or employees, or external factors, such as customer complaints, reviews, or boycotts. For example, in 2017, United Airlines faced a public outcry after a passenger was forcibly dragged off an overbooked flight.

These are just some of the many reputational incidents that might have a significant impact on the perception and success of a business. The list is non-exhaustible and your own personal experience or concerns would highlight many more relevant to your own business.

Reputational risk can be mitigated or managed by taking proactive measures, such as having a robust communication plan, implementing effective security and compliance policies, engaging with stakeholders, clients, consumers and customers, and being transparent and accountable for any mistakes or issues.

Principles Of Significant Business Incident (SBI) Management

Significant business incident (SBI) management is intended to provide a response that meets the needs of the business, its stakeholders, customers, clients or consumers and the broader business community, while delivering an effective and proportionate resolution to the incident.

It cannot be underestimated how the conduct of one or a small number of businesses can adversely affect the public's general opinion of the sector overall.

Consider the banking industry in the aftermath of the global financial crisis in 2008. The behaviour and unethical practices of a few major banks had far-reaching consequences. Actions including risky lending practices, mortgage fraud, and misleading financial products resulted in these banks facing public outrage, legal actions, and massive financial losses. However, the impact extended beyond those specific institutions.

The negative publicity and loss of trust in these major players tarnished the banking sector's reputation. Even well-managed and ethical banks felt the ripple effect, as customers became wary of the industry overall. This loss of public trust had lasting consequences, making it difficult for even the most responsible banks to regain the public's confidence.

This example reiterates how the conduct of a few businesses within an industry can significantly impact the public's perception of the entire sector, reinforcing the critical importance of safeguarding your business reputation at both the individual and industry levels.

The definition provided is deliberately broad to ensure that incidents with the potential to harm the business reputation and community trust are not overlooked. It acknowledges the paramount importance of maintaining trust and confidence in the business response to SBIs, encompassing both major and minor incidents as well as those arising internally.

Although high-profile or extensive incidents are more likely to escalate into or contain multiple SBIs, even less severe incidents and internal matters can escalate and become SBIs. They may seem sudden, but often there are early warning signs.

Early Warning Signs of an impending SBI.

Just like any inquiry will find in hindsight, there will always have been early warnings signs that an SBI was imminent or possible. Without prior preparation and planning these events could easily be overlooked or missed in their entirety until it is too late and the damage is done.

In businesses without clarity of governance, limited data analysis or understanding of that data or cultural environments that do not promote 'speaking out', the risk can be higher.

Key early warnings come in a multitude of guises. No one size fits all and not all apply in every circumstance. The subtlety of an SBI may be almost imperceptible without grouping it together with other factors or similar imperceptibility.

Unusual Activity: Unexpected or irregular patterns of behaviour, transactions, or operations within the business.

Negative Feedback: Consistent and escalating complaints, criticism, or dissatisfaction from customers, clients, or employees.

Data Anomalies: Unexplained changes or inconsistencies in data, including financial records, customer information, or operational metrics.

Internal Disruptions: Disagreements, conflicts, or disruptions within the organization, such as labour disputes or leadership challenges.

Media Scrutiny: Increasing attention from media or public scrutiny related to the business, its practices, or its leadership.

Market Volatility: Sudden fluctuations or downturns in the market or industry that may impact the business.

Regulatory Inquiries: Formal investigations, inspections or inquiries by regulatory authorities related to the business's activities.

Supply Chain Issues: Significant disruptions or breakdowns in the supply chain, affecting the business's ability to operate.

Cybersecurity Incidents: Breaches, hacks, or unauthorised access to sensitive business data or systems.

Financial Warning Signs: Early signs of financial distress, such as declining profits, cash flow problems, or mounting debt.

These early warning signs, when detected and addressed promptly, can help mitigate the impact of SBIs and prevent them from escalating into more significant crises.

Three Phases to Significant Business Incident Management

In adapting the three-phase approach of critical incident management from the police to the business context, we can implement a framework tailored to the unique needs of modern organisations.

1. Phase one emphasises resilience through risk assessment, preparedness training, and resource allocation.
2. Phase two focuses on early detection, notification protocols, and effective resolution of significant business incidents (SBIs).
3. Finally, phase three extends beyond restoration by proactively managing reputation, continuous stakeholder, or customer / client / consumer, engagement, and continuous improvement.

This refined approach equips businesses to not only respond to SBIs but also to strengthen their reputation and stakeholder trust, ensuring long-term resilience and success.

Phase One: Preparing for Significant Business Incidents (SBIs)

• Staff Development: Ensuring that employees are adequately trained to respond effectively to SBIs, including communication and crisis management skills.
• Resource Allocation: Allocating the necessary resources, both human and material, to handle SBIs efficiently and professionally.
• Competent Incident Management: Establishing management structures that reflect a high standard of competency and accountability in handling SBIs.

Phase Two: Managing Significant Business Incidents

• Early Identification: Implementing strong governance processes to identify SBIs at an early stage, allowing for timely and effective response.
• Notification: Ensuring that incidents are promptly reported to the appropriate personnel or teams responsible for managing SBIs.
• Effective Management: Employing strategies, governance and procedures to manage SBIs, retaining grip, in a manner that minimises harm to the business and its stakeholders. Where effective command and accountability for management of the incident is evident at every stage.

Phase Three: Restoring Stakeholder / Customer / Client / Consumer Confidence

• Impact Assessment: Identifying incidents that have significantly eroded stakeholder or customer / client / consumer confidence, even if not initially recognised as SBIs.
• Rebuilding Confidence: Developing strategies for rebuilding trust and confidence through engagement, resolution efforts, or, if necessary, public inquiries.

NEXT ARTICLE

In the next article we will explore the next stages of 'A Strategic Guide to Safeguarding Your Business Reputation and Trust'.

We will discuss:

• Who should identify an SBI - understanding situational awareness
• Utilising the golden hour - optimising your response
• Tools for making effective decisions - IDEAL decision making

We welcome all comments and feedback so please do comment and repost of you found this article helpful. Contact us on our LinkedIn pages The Personal Development People and if you'd like to attend our 2 day business leadership course "Strategies for Safeguarding Your Business Reputation" Contact – Develop People (develop-people.co.uk).