Your Brand Could Be At Risk!


Brands are an emotive experience! They lead us to experience our aspirations, desires and fulfill our physical and emotional needs. They become our friend and associate and a representation of our personality.

There is a lot of learning available on brands and how to go about developing and maintaining one. An area that oft gets missed out is the risks that a brand can face or will face.

Why is identifying and understanding brand risk important?

Given the rising growth of social media  and socio- economic changes affecting all consumers behaviorally, across all industries, globally brands now need to be transparent in their behaviour and communication. Without understanding the customers’ value-chain and communicating clearly its’ alignment on those values a brand opens itself up-to varied potential risk.

Such risk can be direct & indirect.

Look at the fallout Cadbury  is trying to contain!  The issue of traces of pork dna in its chocolates has left the brand out in the cold in Malaysia and the same is gathering momentum across the globe including USA. There is a direct affect on the brand in Malaysia and given social media and consumers’ changed behaviour of using the same to communicate good & bad of a brand, Cadbury’s is having an indirect affect all across the world.

Should we put this down to being an isolated example? Yes the Muslim community has dietary guidelines and the Halal certification is one that assures them that the brand adheres to required quality control and standards. But this is a growing consumer segment with very strong decision-making power that would affect any brand.

Did Cadbury expect such a scenario? Did it have crisis SOP’s in place?

We won’t know clear answers to those for sure at the moment but the brand could have ensured some risk protection. The how and why of that is for another post.

Coming back to brand risk management– BRM (or Brand Risk Management) should be identified, measured and managed within the enterprise risk management framework of an organisation. Given that brand risk is multifaceted—strategic, operational, financial, regulatory—and that, currently, these risks are often, managed by organisations in individual silos (departmental planning based), being able to get a true picture of the potential brand risk is poor.

Brand risk evaluation and planning doesn’t deserve such silo based approach but a much more strategic and integrated approach. Under traditional risk management (originally the domain of finance), brand risk has no definition. It comes across as an output from other identified risk areas such as lawsuits or adverse regulatory decisions or supply chain issues.

In layman terms we can define brand risk as threats to the brand equity that would affect a brand financially & reputationally.

The value of approaching brand risk in a comprehensive manner, utilizing the parameters of looking at the brand experience and its architecture from the point of view of answering the question— “what can affect the sustainability of the brand?”– provides a useful framework for brand risk analysis. Such an analysis can aid in strategic planning of the business and in its overall brand experience framework.