The Cost of Crisis

It’s always tough to answer the question, ‘How much damage does a reputational crisis cause?‘ Unlike a business interruption or accident, the cost of reputational crises is much harder to determine.

Unfortunately, whether you’re in the early stages of a crisis or trying to get a leadership team to find a preparedness program, ‘How much could this cost?’ is the kind of thing crisis managers get asked all the time.

It’s challenging to tie the exact financial effects of a reputational crisis to the event itself, but some recent events in the US provide some quite compelling data. From Axios:

“Anheuser-Busch InBev is still feeling the reverberations of its April decision to engage transgender social-media influencer Dylan Mulvaney. Boycotts have come at a cost to both its stock and beer sales.

– The controversy has shaved billions off its market capitalization amid a 20% swoon in its stock (it’s since recovered but sits well below the 52-week high it hit in March).

– This week, NielsenIQ data from consulting firm Bump Williams showed Bud Light losing its perch as America’s most imbibed brew to Constellation Brands’ Modelo.

Separately, both Kohl’s and Target have been caught in the cultural maelstrom for selling LGBTQ-themed clothing, with right-leaning protests pressuring their stock prices.”

Axios – ‘The financial toll of right-wing backlash: At least $28B in market value’, June 16, 2023 link

The specifics of these events are less important than the clear link they show between a reputational crisis and a financial hit. This kind of polarization seems pretty unique to America, so you might not experience this exact situation with your organization. However, this is some useful data to have to hand when you’re next asked the ‘how much damage could this cause’ question.

(Meanwhile, if you are in America, you need to consider the kinds of social issues you might face. Some of these will be issues you’ll get pulled into; others will be because of things you’ve done or said. There will be times when you get hit by a crisis because you didn’t say anything. These are complex challenges that will only become more acute and intense, particularly in the run-up to the election in 2024.)