The business landscape today is fraught with complexities that are unprecedented compared to just a decade ago. With the confluence of geopolitical tensions, cultural wars, and rapid technological advancements, brands must navigate an increasingly risky environment. This article explores the myriad risks faced by big brands today, the necessity for robust risk management frameworks, and the importance of internal and external alignment in safeguarding reputation and ensuring business continuity.
The Rising Risks for Big Brands
A New Era of Geo-Political Risks
Today’s geo-political climate is marked by polarization and a relentless 24/7 news cycle. For brands operating on a regional or global scale, this translates to an unpredictable backdrop where decisions and actions are constantly scrutinized. The Financial Times recently underscored the need for large companies to appoint Chief Political Officers, tasked with navigating the growing economic and political uncertainties. This new role is indicative of the shifting landscape where political acumen is becoming as crucial as traditional business skills.
Cultural Wars and Brand Vulnerability
Adding to the complexity is the challenge of appealing to diverse, often younger, audiences amid ongoing cultural wars. Recent conservative backlashes against brands like Bud Light, Nike, and Target highlight the precarious position of brand owners. These incidents have led many companies to reevaluate their strategies and engage in intensive risk management discussions.
The Importance of Internal Alignment
Cross-Functional Collaboration
The heightened level of risk demands unprecedented alignment across various business functions. Marketing, policy, legal, and executive teams must work together closely to navigate these turbulent times. The ‘Big brands fund terror through online adverts’ controversy in 2017 was a wake-up call for many CEOs, marking the first time marketing issues took center stage at the executive level.
Managing Internal Narratives
It’s equally important to manage narratives within the organization. Companies need a clear and compelling internal communication strategy to address the diverse political views of their employees, suppliers, and distribution partners. This alignment ensures that the company’s stance is consistently understood and supported internally, mitigating risks of internal discord.
Consistency in Global Operations
Establishing Clear Marketing Frameworks
Inconsistency can be detrimental to global brands. CMOs must implement clear marketing frameworks with stringent checks and balances to maintain consistency across all markets. Surveys have shown that while 88% of companies have such frameworks, their implementation often lacks uniformity. Involving policy and legal teams in the development and compliance processes is essential to bridge these gaps.
Case Study: Unilever’s Consistency Strategy
Unilever, a global consumer goods company, exemplifies the importance of consistency. By adopting a unified marketing framework across its diverse product lines and markets, Unilever has managed to maintain brand integrity and consumer trust. This approach has helped them navigate political and cultural differences while upholding their brand values globally.
Responsible Marketing Frameworks (RMF) for Risk Management
The Need for RMFs
The World Federation of Advertisers (WFA) is developing a model Responsible Marketing Framework (RMF) to guide companies in areas such as environmental sustainability, diversity, equity, and inclusion (DEI), brand safety, responsible media, data ethics, and marketing to children. These frameworks are designed to help brands link their marketing efforts to broader Environmental, Social, and Governance (ESG) goals.
Practical Implementation of RMFs
Brands like Patagonia have successfully integrated RMFs into their operations. By aligning their marketing strategies with their environmental and social commitments, Patagonia has not only mitigated risks but also built a loyal customer base that values their ethical stance.
Statistics and Examples
The Impact of Political Risks
According to a study by the Economist Intelligence Unit, political risks have a significant impact on business operations. The study found that 47% of executives believe political instability poses a critical threat to their businesses. This underscores the importance of having dedicated roles like Chief Political Officers to navigate these challenges effectively.
Cultural Wars and Brand Backlashes
The backlash against Bud Light for its association with a transgender influencer is a stark reminder of the potential fallout from cultural wars. The incident led to a significant drop in sales and a wave of negative publicity, illustrating the importance of careful consideration and risk management in marketing decisions.
The Role of Internal Communication
A survey by Weber Shandwick found that 85% of employees feel more engaged when their company communicates a clear and consistent narrative. This highlights the critical role of internal communication in managing risks and maintaining employee morale.
Conclusion
In an era of unprecedented risks, big brands must adopt robust risk management strategies to navigate the complexities of modern business. By aligning internal and external narratives, implementing clear marketing frameworks, and developing comprehensive RMFs, brands can mitigate risks and ensure business continuity. As the landscape continues to evolve, staying ahead of potential challenges and adapting to new realities will be critical for long-term success.
