LONDON, 5 February 2008 – Product recalls, Chinese child workers and supply chain disruption have led food and drink companies to recognise how damage to reputation can have devastating consequences, citing it as their biggest threat in Aon’s Global Risk Management Survey. Even though 67% of food and drink companies have plans to tackle reputational damage, insurance broker Aon is warning businesses in today’s sector forum to test them regularly and plan for emerging threats in 2008, such as the biofuel crisis and food terrorism.
High profile product recalls have knocked consumer confidence, whether as a result of malicious product tampering or accidental contamination. In 2007, we’ve seen incidents of salmonella, syringes in loaves and food contaminated accidentally with nuts. Companies need to properly manage recalls to prevent the devastating effects on reputation but, worryingly, a third of the food and drink sector have no plans to protect their reputation.Proactive planning will also create opportunities to enhance brand and reputation.
As companies prepare for 2008, they must bear in mind that their reputation could also be affected by new and emerging threats. These include:
- lack of water supply;
- consolidation of industry;
- food supply and shortages eg. competition for grain for food and biofuel;
- food terrorism/ malicious acts;
- increasingly litigious society, not just in the US and UK, but in developing nations.
Flo Frankland, head of Aon’s food and drink sector group, said: “To prepare for the plethora of risks in 2008, companies throughout the supply chain need to adopt better crisis management procedures and practice their business continuity plans to test various situations.”
Aon is urging organisations to focus on creating proactive risk management strategies to protect and enhance brand and corporate reputation. Companies should assess the reaction of key stakeholder groups to a range of unexpected events and use this to drive planning. The process can be extended to consider structured approaches to assess and manage organisation’s dependencies on suppliers.
- are the plans simply crisis management and PR plans designed to minimise the impact once the damaging event has occurred?
- do the plans treat damage to reputation as a risk in its own right or as a consequence of other risks?
- is there enterprise-wide planning in place for prevention?
In terms of enhancing brand:
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do organisations understand the threats and opportunities associated with these changes and how they might impact their brand and reputation?
- are they able to assess and evaluate in a coherent manner the impact of events of their key stakeholders perceptions?
- do they have proactive strategies in place to manage their reputation and brand through these transformations in their businesses?
Alexandra Lewis
0207 882 0541
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Aon Corporation (NYSE:AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. Through its 43,000 professionals worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was ranked by A.M. Best as the number one global insurance brokerage in 2007 based on brokerage revenues, and voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 by the readers of Business Insurance. For more information on Aon, log onto www.aon.com.
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