business interview | corporate branding
regulators and your external stakeholders in the right way, not managing your staff in the right way in terms of communication – it all builds up to if you don’t do those things correctly, you’re going to create massive reputation risk for yourself.” Bailey adds that when one refers to reputation risk, “it’s to do with anticipating and thinking about what’s going to happen in the future because if you’re dealing with something here and now, that’s either a crisis or it’s an immediate issue. Whereas you can do things, which can help you to manage your reputation risk by looking at it with a long-term view”. How does Standard Chartered Bank view reputation risk? “It links to the point that I just made there about trying to be anticipatory, thinking about what’s going to happen for the future and putting yourselves in the shoes of the stakeholder,” says Bailey, adding that, to him, the ultimate benchmark of delivering a great customer
Bailey tells The Edge, “The legal and compliance team are one of our day-to-day partners that we would work with to identify and address potential risks and it’s only going to get more important.”
64 | The Edge
experience, to him, is The Walt Disney Company. “To me,” he says, “The Walt Disney Company always puts itself in the shoes of the end-user and the consumer to be able to work out exactly what they really need. This thought chain would help us to think – ‘if this scenario comes up in the future, how will it affect relationships with regulators? The media? The clients? The investors? With staff?’ So whenever we consider reputational risks, you have to think of them with those different lenses on.”
Brand value and reputation
To Bailey, the relationship between safeguarding corporate reputation and keeping the institutional brand value intact is deep and the impact can be felt instantly. Explaining the depth of the equation, Bailey says, “It takes a very long time to build the profile of a brand and just one simple mistake can really damage what that brand stands for and people’s views of you, and especially in today’s world, in the day and age of social media, so much can happen so much more quickly and you just can’t control things in the way you might have been able to in the past.” And the interface between reputation risk and corporate governance? Standard Chartered Bank, for example, Bailey says, has a number of position statements about “the things we will and won’t do. So we have very clear positions on gambling, weapons, defence, environmental standards, human rights for example. By having those position statements, it helps us manage our risk as an organisation because if we were to participate in some of those activities that I’ve just talked about.” These activities, according to Bailey, can massively damage the reputation of an organisation. So by putting certain policies and principles in place, it helps manage reputation risks to a level that you feel is acceptable as an organisation, and actually you do get recognised by your clients for it. Reputation risk has a high degree of overlap with the legal and compliance functions in today’s financial institutions. Explaining the overlap, Bailey says, “The legal and compliance team are one of our day-to-day partners that we would work with to identify and address potential risks and it’s only going to get more important.” Bailey predicts that there is going to be
more focus on the legal and compliance functions in the near future too because there is “so much emerging regulation in the banking sector that we have to be prepared to have a much more robust relationship with our legal and compliance colleagues, to help them address all the points and the regulation that’s coming our way and understanding that if you can’t meet those requirements, then actually again, it’s going to become a huge risk”. At the functional level as well, Bailey thinks that as the corporate affairs function, they are responsible for internal communications, “where we have a massive role to understand and interpret what our legal and compliance team are telling us and helping our staff understand what’s going to happen and how they need to prepare”.
Five cardinal rules
On what a business entity needs to abide by irrespective of the sector, Bailey says that the first and foremost necessity is to anticipate. “You have to stop and think about what could happen. You may say certain things are never going to happen to our organisation, but you just don’t know. So anticipate.” Second, in Bailey’s view, is the crucial task of taking external stakeholders’ views on board. “Make sure you understand what’s coming up on their minds, share your expertise and your experience if you have some, but also look to see if you can reflect what they’re thinking about and help them secure answers from other places as well if you don’t have it yourself.“ Third, says Bailey, is practising inclusiveness, in the sense that managing organisational reputation is everybody’s responsibility. “Every member of staff is a first line of defence. So if your staff understand what risk is all about, if your staff understand what the differences between right