Today’s society is characterized by an impressive speed of information circulation, a reality that brings numerous benefits, but which, at the same time, can bring important negative aspects, among them the image crisis. Given that any incident can be amplified through various social networks, individuals, companies and state institutions can go through situations that quickly destroy reputations built over decades. Such crises do not only affect the personal image, but also affect other aspects, such as business relations with partners, investors and clients.

Image crises can appear at any time, for various reasons, requiring proactive measures to be prepared in the event of such a situation, but also reactive measures, applied after its occurrence. The following article offers useful information for those who may face an image crisis, emphasizing the importance of an effective system for managing negative effects, which can affect, sometimes irreversibly, the reputation of a person or a company.

1. Image crisis – General information

Public figures and companies depend to a large extent on the way they are viewed, success in business being most of the times closely related to having a positive image that gives confidence.

The public’s reputation and trust can be put at risk unexpectedly due to the interconnected world, in which information circulates instantly and reaches an impressive number of people, image crises being from this point of view some of the most serious problems.

1.1. What does the image crisis mean – the definition of the phenomenon

The image crisis is one of the situations with major destructive potential on the smooth running of a business, manifesting itself through the deterioration of a person’s or a company’s reputation due to the spread of information about an unpleasant incident or a controversial statement. Such a situation can be triggered by factors within the organization, such as faulty communication or management mistakes, or by external factors, such as cyber attacks or media coverage of sensitive events.

Basically, an image crisis is a manifestation of the inability of a person or organization to positively influence the public’s perception of an event related to them. Such situations can harm the reputation and, thus, can generate mistrust on the part of clients and partners, financial losses due to the decrease of the value on the market and the need to make additional expenses to remedy the damages.

The image crisis can be understood more easily if its effects on companies or other economic organizations are taken into account. These consequences can manifest both in the short term (financial losses due to the decrease in sales or share prices on the stock exchange, deterioration of public confidence, negative media exposure), and in the long term (damage to reputation, change in consumer behavior, deterioration of the internal organizational culture) .

1.2. Types, causes and examples of image crises

Image crises can contribute to the appearance of major problems within some companies due to the alteration of the public’s perception regarding this, the consequences being difficult to remove, both in terms of effort and time required. A reason for the difficulty of managing these crises also comes from the appreciable number of existing types, each of which most often requires a specific intervention to generate positive results.
Among the most common types of image crises are:

• Image crises generated by problems with the services or products offered to customers. Under certain conditions, economic organizations put on the market certain services or products that do not meet all the conditions, especially those that have a role in the safety of their use. An example of this is the case of the Samsung company that produced a phone model that was equipped with batteries that had a tendency to explode, which led to a sharp drop in sales of all the company’s products;
• Image crises caused by the behavior of employees. Crises of this type occur when the employees of some companies, especially those in management positions, are involved in scandals or make inappropriate statements, which also reflects on the reputation of the companies. Such a situation was registered in 2017, when one of the managers of the Uber company was involved in a resounding scandal, the negative effects falling not only on the person, but also on the company he managed;
• Image crises triggered by ethical and social problems. Situations of this kind occur when public persons or companies do not respect accepted moral and social norms regarding aspects such as human rights, equality, diversity or environmental protection. A resounding case of this type took place in the 90s, when the Nike company was accused of allowing the use of child labor in factories in underdeveloped countries;
• Image crises caused by faulty communication. A crisis of this kind can occur when a company faces a problem that is communicated incorrectly, with delay or without transparency. A famous case is the one in which the Boeing company was involved in 2019, following some aviation accidents in which a model of the company’s plane was involved. The company’s initial lack of reaction contributed to the sharp degradation of public confidence in the safety of all Boeing-produced aircraft;
• Image crises generated by external factors. In certain cases, image crises occur due to events beyond the company’s control. A situation of this type was also registered in Romania, when the Cernavoda Nuclear Power Plant was considered unsafe, due to accidents that occurred at nuclear power plants in other countries.

2. Management of the image crisis of a public organization or person

The current business environment is characterized by a strong globalization and rapid spread of information, media platforms having a significant role in this sense. These conditions contribute to increasing the chances of image crises, which forces companies and public figures to take certain measures in the direction of their management to avoid devastating situations in terms of reputation and credibility.

Among the useful measures that can prevent the escalation of problems are the preparation of proactive actions, the quick identification of the first signs of crises and the application of the various solutions available.

2.1. Proactive measures useful for addressing image crises

The management of image crises must be constantly in the attention of companies and public persons, because the negative effects can be significant if the necessary measures are not taken in this regard. The recommended approach is the proactive one, of preparation prior to the possible event, image crises being from this point of view easier to prevent than to treat.
Among the measures of this kind, which can make a difference in the case of image crises, are:

• The first essential step in addressing the problem of the image crisis is the preparation of a management plan. By creating clear and detailed procedures for quick and efficient response, the foundations of an appropriate intervention are laid. The crisis team must include people from various departments (public relations, IT, human resources, etc.), who periodically test the plan through simulations;
• Another useful proactive approach is the permanent monitoring of reputation by monitoring social networks, reviews and news for the early detection of any problematic situation. In this way, a quick intervention is possible, which offers maximum chances of success;
• Companies must have at their disposal effective means of transparent and prompt communication in order to be able to offer the right answers, in case problematic situations arise. Specially designated spokespersons must have access to various communication channels to be able to intervene if the public requests clarification;
• A valuable proactive measure is the building over time of a resilient brand, well defined and prepared to brilliantly face various image crises. Creating a positive image is important in mitigating the consequences of a crisis in the event of such an event;
• The public’s positive perception of a company has a proactive role in the problem of image crises. In this sense, companies can get involved in corporate social responsibility projects, such as those related to sustainability, environmental protection and intra-help actions.

2.2. Recommendations for solving image crises that have already started

Proactive measures regarding image crises do not always succeed in helping to avoid a difficult situation. Thus, various types of image crises can be triggered, which requires a quick, transparent and well-thought-out intervention in order to limit the problems and avoid long-term negative effects.

Among the measures recommended in this regard are:

• The first step is the quick evaluation and analysis of an image crisis. Thus, it is possible to understand exactly what happened, what is the public’s perception of the incident and what are the causes that contributed to its triggering. This initial assessment is useful in realizing the response strategy, which will provide positive results;
• The second step is the activation of the crisis team or its formation if it does not exist. The team must include communication specialists, but also other people who can work effectively under pressure and know what an image crisis entails and how to get out of it well;
• After analyzing the examples of image crises, it was observed that open communication and the assumption of responsibility are of great help. In this way, the public will notice the openness of the organization towards solving the problem and will be more willing to understand how the incident happened;
• Quick communication through the media to the public helps to prevent the situation from worsening. The constant updates on social networks and periodic press releases, which present precise and current information about the measures taken to solve the problematic situation, are of great help. The corrective measures applied must be clear, easy to understand and allow the repair of the problem situation.

3. The role of insurance as a tool in managing image crises

Image crises are some of the most problematic situations that can affect the financial stability of a company by degrading the reputation and public trust. The financial losses that can occur in such situations have the potential to negatively influence the success of a company in the long term, possibly leading to bankruptcy under certain conditions.
For this reason, economic organizations increasingly turn to the instrument of insurance, which has an essential role in managing crises of this type. Among the types of insurance useful in this sense are:

• Many of the image crises are triggered by cyber attacks or computer security breaches. If such events take place, the image of the company is seriously damaged, which forces the need for major expenses to remove the traces of the incidents. A valuable tool in this sense is IT professional liability insurance which offers funds to cover remedial costs or compensation paid to affected third parties;
• Another frequent cause of image crises are errors or negligence related to the provision of services. Companies can shelter themselves from difficult situations through professional liability insurance, thus obtaining financial protection in connection with the compensation claims of some affected clients , thus contributing to the management of the crisis and to the restoration of the reputation;
• General civil liability insurance is useful if there are image crises generated by material damage or bodily injury caused to third parties. This type of policy is a real financial safety net, because it covers legal costs and compensation, which helps to properly manage the crisis.

In conclusion, the appropriate approach to image crises through proactive measures and those recommended after the occurrence of the unwanted event represents an ideal method of protecting a company’s reputation in order to maintain public trust.