Time’s up: Five consequences of identifying a risk too late

November 19, 2021 · READ

When a brand crisis hits, time is not on your side. As our Corporate Leaders Risk Survey reveals, CEOs know all too well the high price of identifying and responding to a risk too late. They also recognize the role that digital chatter plays in accelerating risks. When the race is on to prevent a brand crisis, it’s better to be the hare than the tortoise.

The window of opportunity is closing fast, and bad actors know it

Organizations struggle to keep pace with digital chatter and the bad actors and groups behind it. Far from a criticism, this is the reality leadership teams face today. There’s simply too much digital chatter, moving too quickly, across too many social media platforms. This leaves little time to react, let alone validate whether or not the narrative is accurate.

According to our study, because of the unprecedented speed and scale of digital chatter, more than 4 in 5 CEOs (82%) acknowledge that the window of time to react to risks has shortened considerably.

With 4.48 billion people using social media worldwide — 61% of the world’s population per Kepios — there’s cause for concern. Consider too that the average global user maintains 8.8 social media accounts according to a DataReportal study. Every minute of every day, the volume of posts, comments and shares by these users across social media platforms number in the six figures.

Speed and scale are not the only contributing factors. Digital chatter extends into known and unfamiliar places. These conversations happen online across the open/visible web (a.k.a. the searchable Internet), as well as the closed or “dark” social media channels, forums and messaging apps. Believe it or not, the open/visible web accounts for just four percent of Internet engagement. The deep web, by contrast, is 500 times larger and more unwieldy to monitor for brands.

Unfortunately, a growing number of bad actors and agenda-driven groups understand this weakness and exploit it, as was the case for a luxury fashion brand recently. In fact, 77% of CEOs surveyed believe more companies will be targeted by organized groups online or internet savvy actors intent on damaging their brand within the next 12 months. Another 80% expect to see social media attacks rise next year.

In other cases, it’s not malicious bad actors or agenda-driven groups who are fanning the flames of risks, but rather it’s benign stakeholder audiences who unknowingly amplify an issue. Empowered by social media they add to the chaos, making it even more difficult for companies to cut through the noise while the window of opportunity to respond or react to the situation closes.

Truth and consequences of lost time

The dangers of a risk slipping through the cracks is all too real now. When asked to rank the top five consequences of identifying or responding to risk too late, CEOs prioritized negative publicity (82%), brand reputation (80%), employee morale (66%), financial performance (58%) and sales/profits (48%).


These findings were further validated by a Forrester study conducted earlier this year, on behalf of Resolver, which analyzed 75 B2C company 10-K annual reports. Not only did 99% of the companies emphasize the importance of protecting brand reputation, image, loyalty and equity, they also acknowledged that damage to reputation can injure sales and lead to operational disruptions and costs.

The study also highlighted the true costs of a brand crisis in the event a risk goes undetected. The precise cost of a brand crisis is critical information, not only for C-suite, risk management, and business continuity leaders, but for the brand communications professionals—chief communications officers, chief marketing officers, social media strategists—who have a role in identifying, preventing or reducing the severity of brand crises.

According to the Forrester study, the true cost of a brand crisis can impact the entire enterprise, including:

  • Costs to recover. Significant action and expenditures are required to react to a brand crisis; recovery will directly impact a company’s balance sheet via operating expenses and labor costs.
  • Excess operational costs and fees. Brand crises can lead to increased costs—from increased customer acquisition expenses, to staff overtime, to regulatory fines or refunds.
  • Reputation and CX. Brand crises immediately damage brand reputation and, over time, multiple crises can chip away at brand value and perception.
  • Lost revenue. Brand crises can lead to customer churn, boycotts, as well as lower customer acquisition, purchase frequency, and average order value.
  • Lost market capitalization. Brand crises can lead to temporary or long-term reductions in share price, or underperformance of the potential share price.
  • Security and threats. Brand crises can lead to lost revenue and excess operating budget from disrupted operations, along with additional costs of security, property damage, insurance, and liability.
  • Risk of making wrong decisions. Brand crises can lead to major pressure to make business decisions or take positions that may or may not be in the company’s or customers’ long-term interests.

Considering all of the above, even a relatively minor and short-lived brand crisis can quickly rack up anywhere from $100,000 to millions of dollars in labor, costs, and losses.

In other words, the intangibles are now dictating very tangible consequences. Analysis in Aon’s 2018 Reputation Risk in the Cyber Age study concluded that reputation risk events can result from many different sources, such as supply chain disruption, cyberattack, product failure, executive malfeasance or adverse social media. Advancing technology has changed the speed and channels of information flow, which now operate in a global, 24-hour news cycle.


Fast forward to today and that 24-hour news cycle feels more like 24 seconds. And ignoring the digital chatter of certain groups can have a negative impact on the bottom line. It’s no wonder the Forrester study also found that more than two thirds of annual 10-K reports also said social media can originate, accelerate, or worsen threats to brand reputation, regardless of if the threats are true or not.

Encouraging news for risk-savvy corporate leaders

CEOs are redefining what it means to be risk averse, and rightly so. They’ve witnessed the damage brands have endured due to rampant digital chatter and the bad actors and agenda-driven groups on social media exploiting its power. Tolerance for such risky situations is sinking fast. CEOs want answers and solutions to brace their companies for the next known and unknown risk to come.

Despite reporting feelings of uncertainty about today’s risk landscape, nearly three-quarters of corporate leaders we surveyed (72%) agree that investments in new risk intelligence solutions and technologies will increase within the next 12 months. What’s more, there is growing recognition that companies need to embrace resilience models that prioritize keeping up with risks accelerated by digital chatter.

When every second counts, getting out ahead of an issue before it becomes a crisis is the best defense.  Our Risk Intelligence Graph analyzes millions of digital conversations in real-time, revealing the hidden relationships between individuals and groups in order to predict customer impacts as early as possible. In fact, a Forrester study conducted on behalf of Resolver found our customers reduced the impact of a crisis by 40 percent, prevented one-in-three crises per year entirely, and achieved a 572 percent ROI.

Today Resolver protects more than $6.5 trillion in combined market capital for our customers. We can protect yours too. Learn more about our Corporate Risk Intelligence solution.

Download the entire Corporate Leaders Risk Survey here.

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