By: Hadi, Amir, Jenny, Atikah & Faeeza BALENCIAGA
Background Founded in 1918 by Cristóbal Balenciaga, who launched his first shop in San Sebastián, Spain. Originated in Spain, later relocated to Paris. Cristóbal Balenciaga closed his fashion firm in 1968 and died in 1972, capping off a long and successful career. Luxury fashion brand setting trends, focusing on ' strong ' women ' s clothing.
Need for Reputation Risk Management Guideline 1. Band Preservation: Acknowledges the importance of safeguarding brand value and customer trust. 2. Proactive Risk Management: Identifies potential risks proactively, formulating detailed mitigation actions. 3. Crisis Preparedness: Emphasizes preparedness for crises, enabling quick response to external factors. 4. Ethical Practices: Demonstrates commitment to ethical business practices and legal compliance. 5. Social Media Management: Recognizes social media ' s impact, establishing a structure for online presence. 6. Employee Morale: Aligns the workforce with ethical practices, boosting morale in the competitive fashion sector.
Guidelines on the Internal Governance of Reputational Risk
Overall Reputational Risk Strategy Balenciaga employs a strategic approach to reputational risk. The strategy includes crisis management, communication plans, stakeholder engagement, etc. In response to a controversial campaign, Balenciaga ' s creative director publicly expressed regret.
Management Framework and Responsibility 1. Identify Potential Reputational Risks: First step in reputation management is identifying risks like media backlash, product recalls, and data breaches. 2. Assess Likelihood and Impact: Conducting a comprehensive examination to assess the probability and potential consequences on the brand' s reputation. 3. Develop a Risk Management Plan: Tailored risk management plan, emphasizing crisis response protocols, transparent communication, stakeholder engagement. 4. Implement of Risk Management Plan: swift executing strategies like crisis management, communication tactics, and stakeholder engagement. 5. Monitor and Review: This involves consistent monitoring, regular assessments, and periodic reviews for effectiveness and relevance.
Policies and Controls — Ethical Framework Establishment: Multi-layered policy formulation with external ethics experts. Collaboration with child protection organizations and diverse stakeholders. Example: Contentious festive-season promotion revealed ethical guideline gaps. — Internal Cultural Shift: Internal commitment to accountability, shifting away from external blame. Cultural shift through training programs, workshops, and awareness campaigns. Fostering a culture encouraging open dialogue on ethical concerns. Example: Nurturing transparency and ethical awareness to fortify policies. — Involvement of External Ethics Committees: Consideration of external ethics committees for unbiased campaign evaluation. External perspective adds scrutiny and accountability, aligning with industry practices. Proactive risk mitigation strategy through external expertise. Example: Committees as a layer of accountability in ethical framework.
Examining Risk Tolerance and Limits — Recalibration of Risk Tolerance: Withdrawal from events signals substantial recalibration. Reevaluation against societal expectations after public backlash. Reflective process for comprehensive risk assessments before campaigns. Example: Removal from Designer of the Year list after controversy. — Establishment of Risk Management Committee: Consideration of a risk management committee for comprehensive assessment. Involvement of representatives from ethics, PR, and child protection. Proactive measure aligning with industry best practices. Example: Dedicated committee to evaluate creative decisions' impact on reputation. — Periodic Internal Risk Assessments: Routine risk assessments as part of regular operations. Identifying and addressing potential reputational risks. Integration of risk evaluations for agile risk management. Example: Routine assessments for an adaptive approach.
Reporting Reputational Risk — Robust Reporting Mechanism: Acknowledgment of mistakes and commitment to changes. Importance of a comprehensive reporting structure for swift responses. Example: Balenciaga's response to the reputational crisis. — Continuous Monitoring and Reporting System: Consideration of a continuous monitoring and reporting system. Foster organizational culture encouraging open communication. Example: Balenciaga's initiatives for continuous improvement. — Collaboration with External Entities for Validation: Collaboration with independent auditing firms or industry watchdogs. External validation assures stakeholders of thorough reporting. Exploration of partnerships for an additional layer of assurance. Example: Seeking external validation to enhance credibility.
Risk Identification & Assessment
Risk Identification And Assessment Conduct a thorough analysis to identify the potential risks accurately Proactively implement strategies to mitigate these risks and ensure smooth operations. Preserving brand integrity is paramount for a luxury brand like Balenciaga, and identifying potential risks plays a pivotal role in safeguarding the brand' s image, reputation, and competitive positioning in the fashion industry. Identifying potential risks
Item 1 Item 2 Item 3 Item 4 Item 5 0 10 20 30 40 50 Assess each identified risk' s likelihood and potential impact to prioritise the most critical ones. Evaluating the probability and impact of each risk Providing organisations with insights to prioritise their responses effectively. Utilise a probability scale to quantify the likelihood of each risk occurrence and a severity scale to determine its potential impact. Concentrate efforts on addressing the most significant and potentially harmful risks initially Ensuring that resources are allocated to mitigate the most critical threats. Assessing the likelihood and impact:
Proactively address and minimise the impact of identified risks on the organisation. Communicate the risk mitigation plans across the organisation to ensure that all employees are informed about the measures in place to minimise potential risks. Entails brainstorming and implementing measures to decrease the likelihood of these risks. Regularly conduct training and drills to familiarise employees with emergency procedures, ensuring they are wellprepared to respond appropriately in unforeseen incidents. Developing risk mitigation plans:
Assess and evaluate the effectiveness of the risk mitigation measures regularly. Establish a dedicated team or assigning an individual responsible for overseeing and revising the risk mitigation plans. Define clear indicators for when the risk level may require immediate attention or adjustments to the mitigation plans. The effectiveness of a well-designed risk mitigation plan relies on its ongoing review, updates, and communication throughout the entire organisation. Continuously monitoring and updating:
Risk Control
Enterprise risk management (ERM) is an approach that tactically examines risk management with a broad outlook encompassing the entire company or institution. It can be seen that ERM’ s strategy can be applied in order to prepare Balenciaga for any potential risks found. Enterprise Risk Management (ERM) Risk Training Balenciaga must provide risk training programs to its employees in order to avoid any miscommunications during a crisis event. Illustrate Balenciaga ’ s dedication to establishing an organizational culture that prioritizes safety and minimizes potential risks.
Balenciaga is obligated to offer substantial involvement to its stakeholders. In light of this, an active approach that incorporates a communication system that effectively addresses the risk may result in a reduction of the crisis' impact. Stakeholder Engagement Trend Recognizing trends is crucial for Balenciaga to comprehend potential hazards within the present and future time-frame. Balenciaga may also discern emerging prospects, empowering the brand to proactively exploit alterations in the market, innovate its product offerings, and maintain a leading position amidst competitors within the dynamic realm of fashion.
Balenciaga must adopt an approach that enables the organization to acquire data pertaining to the interests and viewpoints of its clients. Through the identification of data, Balenciaga can customise its offerings and services, tailor marketing approaches, and foresee evolving consumer preferences, fostering a flexible and responsive business model that not only aligns with customer expectations but also mitigates potential risks linked to market fluctuations and changing trends. Data
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