Risks: does your business have immunity? Reputational risk (VI)

Risks: does your business have immunity? Reputational risk (VI)

Rolandas Mištautas, Head of Law Firm KONSUS LEGAL

Reputational risk refers to a deteriorating or clearly negative public perception of a business object or entity for one reason or another, in particular when such a perception in the social environment results in a perceptible, significant loss of a company's clientele, or a direct and indirect loss of funds.

As many of us are well aware, reputations can be built, strengthened or, conversely, damaged, undermined or destroyed. The insights of researchers in psychology, public relations, propaganda, hybrid aggression and communication processes suggest that there are quite a number of ways to do this. Your company's reputation may not be deliberately attacked, but your own wisdom and prudence in protecting it will certainly not hurt either.

In today's stressful economic and legal environment, with fierce day-to-day competition and increased societal stress, how can you avoid both natural and provocative pitfalls, so that even in the harshest of business environments, you can keep your reputation strong?

One of the most important elements in maintaining and fostering it is the ability to resolve social conflicts peacefully, making effective use of all mediation tools and avoiding unnecessary litigation.

A position based on personal principles and ambitions is natural and understandable. We are all human beings and emotions are a natural part of who we are. However, in the long term, is it really worth it?

When the so-called human factor kicks in, it is easy for both (or more) sides of a dispute to be tempted to become embittered or to resort to psycho-emotional means. Often even where more moderate negotiation based on the law and legal principles would suffice.

Why waste your time and nerves? An economically unjustified so-called "principled" stance, especially if it is also driven by natural human ambition, can have a negative impact on your business and your company's image.

Not to mention the unnecessary stress that can be caused by, for example, pointless negotiations with disappointed customers, debtors or unreliable business partners. As it happens, the image of a company relying solely on its supposedly "huge influence", its "positioning as a legal force" is not as popular as it used to be, and it is causing, often unnoticeable at first glance, but significant damage to business prospects.

The evolution of business ethics over the last decade has led to a partly paradoxical, partly very logical change: today, it is no longer necessary to use brute legal "force" to assert one's position. Where before you would have wasted your time, the time of your team and even the time, nerves or even the health of your loved ones, use legal mediation specialists.

Things like successful negotiation, balanced dialogue, peaceful, cost-effective solutions to disputes and savings where previously there would have been countless court costs are the task, concern and job of mediators.

It is precisely these situations that their training, experience and knowledge are designed to deal with, and they have the specific knowledge and skills to deal with extremely stressful situations and to offer their clients the optimal and best solutions.

To put it simply: one way or another, we are already living in the 21st century. Dare to save yourself for more important things: if you devote most of your time and effort to business development and give the mediator(s) the work that is theirs, no one will suffer. Meanwhile, your business, yourself, your company and the people you care about will also benefit. And not just financially!

Updated: 2023-03-31