Why Your Board's Blind Spot is Costing You Your Reputation
Earlier this week, FleishmanHillard published a report that looked at the readiness of companies to the rising number of issues and potential crises. The report, 'Leading in the Era of Compounding Crisis,' is both a warning and a wake-up call. It confirms what many of us in strategic communications and corporate advisory have suspected: modern crises do not arrive as single, neat events. They layer, amplify and feed on one another. The fact is that Boards and C-suite teams today remain organised around last-century culture and assumptions about risk, expertise, and decision-making, which increases their reputational risk and, as a result, financial risk.
The issue has two sides: what and how executives view risk and how they react to it and also what value they place on trust, reputation and perception. Because, as it stands, brand value is seen as a tactical asset rather than a strategic intangible asset.
Why FleishmanHillard’s findings matter now
FleishmanHillard’s UK study interviewed senior leaders and found a stark preparedness gap. Yes, executives perceive an expanding set of threats, from cyberattacks and supply chain shocks to geopolitical threats, disinformation, and cultural flashpoints, and consistently report that they are less ready to manage those threats than they are concerned about them.
The report highlights, for example, that leaders view cyber, supply chain, and customer-service failures as among the top risks with a significant impact on EBITDA. Yet, many do not feel ‘very prepared’ to respond.
That same report makes two practical observations that are hard to ignore. First, crises now compound and cascade: one issue creates conditions for another. Second, internal failings, delayed decision-making, poor alignment and weak issue reporting often convert a manageable incident into a full-blown crisis. Both factors mean that a reactive, siloed approach to risk management is no longer adequate.
The expertise gap at the boardroom table
Without a doubt, the uncomfortable truth is the structural mismatch between the skills boards have and the risks companies now face.
Traditional boardroom profiles prioritise financial, operational and legal experience. Without a doubt, that is critical, of course, but in today's world, it is not sufficient.
Independent research reveals that communications leaders are still rarely represented at the highest governance levels. For example, Spencer Stuart’s analysis notes that very few chief communications officers have directorships on large company boards. That absence matters because communications and reputation are strategic, not tactical, risks.
As I’ve argued before, while reputation might be an intangible asset, it is one of the key economic and value drivers. Recent analysis of the modern economy shows intangible assets now dominate market valuation. For the S&P 500, intangible assets account for the vast majority of market value, a shift that magnifies the cost of reputational damage and the upside of earned trust.
Boards need to realise that the cost of recovering from a major crisis often greatly exceeds what it would have cost to invest in reasonable prevention, preparedness and reputation protection. Not treating reputation and communications expertise as strategic assets and value gatekeepers exacerbates risk, which could be managed.
How the gap hits valuation and profitability
Two linked dynamics make the expertise gap material to valuation.
First, direct shock. Cyber incidents, product safety failures, or a mismanaged employee scandal can significantly impact sales and margins. FleishmanHillard’s respondents identified cyber, supply chain, and legal or regulatory shocks as the risks most likely to damage EBITDA. When these events compound, for example, a cyber breach that triggers regulatory scrutiny, employee unrest and negative media attention, the financial effect can multiply.
Second, the slow burn. Market confidence, customer loyalty and investor appetite are all sensitive to trust. Surveys from major trust studies show that public confidence in businesses and leaders is a significant variable in purchasing and investment choices; companies with higher trust metrics are better positioned to weather shocks. The point is stark: trust and reputation are not peripheral to the matter. They are a material factor in commercial resilience.
For boards and investors, the implication is straightforward: reputation and communications are not 'soft' risks to be passed down the organisational chart. They are financial exposures that deserve board-level oversight, specialist expertise and clear KPIs that link back to business value. After all, as Lloyd’s of London report found, reputation can account for up to 43% of market capitalisation.
The cultural problem: risk as something to react to, not plan for
Culture is both cause and effect in the compounding crisis. FleishmanHillard finds that leaders are increasingly cautious in public because they fear internal backlash. That fear culture drives overly defensive decision-making, which can in turn precipitate escalation. In short, when boards and executives act from fear rather than insight, they make errors that compound risk.
And this view of risk is what differentiates established enterprises from lean and mobile disruptive start-ups.
Start-up leadership is typically founder-led, driven by speed and growth, comfortable with uncertainty, and more operationally hands-on. Their boards are smaller, more tactical and often reflect the interests of the lead investors. This, while Enterprise boards and C-suites are typically process-oriented, risk-averse, long-term stewardship-focused - think institutional investors, with formal committees (audit, remuneration, risk). Decision-making is often layered, consensus-driven and influenced by regulatory and investor reporting rhythms. Senior roles tend to reflect long-established governance norms, for example, finance, legal and operations expertise.
A healthy organisational culture treats issues reporting and reputational insight as routine business. It encourages early escalation, cross-functional problem-solving and scenario rehearsal. That requires not only the right processes but leadership that values openness and who are practised in communicating under pressure.
Practical recommendations for boards and leadership teams
Based on my experience, these are the practical steps boards should adopt now.
Embed communications and reputation expertise at board level or in direct board advisory roles: Boards must deliberately include directors or trusted independent advisers with senior strategic communications experience. The relative scarcity of CCOs in boardrooms remains a critical governance gap that shareholders and investors need to address to mitigate risk to their investments more effectively. Where directorship is not immediately realistic, establish a permanent, formal advisory role with direct access to the chair, CEO and general counsel.
Treat reputation as a financial metric: Introduce reputation KPIs and scenario-tested reputation stress-tests alongside liquidity and credit stress-tests. Use data and sentiment analytics to make reputation measurable and visible in board papers. Advisory firms already estimate reputation as a material share of market value; boards should take that seriously.
Radically Restructure Risk Committees: The siloed risk committee, focused on financial and operational hazards, is obsolete. An Integrated Risk Council must replace it. This council should formally include the Chief Communications/Reputation Officer, the General Counsel, the CHRO, the CTO, and the Head of Public Affairs. This cross-functional team must meet regularly to conduct reputational risk assessments alongside operational ones, using tools like FleishmanHillard’s issues tracker to scan the horizon for compounding threats dynamically.
Update director skill matrices and succession plans. Board refresh should include skills such as digital literacy, geopolitical risk, public policy, and strategic communications. For publicly listed firms, especially, these competencies are material to oversight of the business model and the firm’s licence to operate.
Practice with realism. Run red-team exercises that stress-test reputational scenarios, misinformation campaigns and internal leaks. Rehearsal builds the muscle memory that leadership needs to act decisively and proportionately. FleishmanHillard’s research highlights how rehearsal is one of the most effective ways to avoid decision paralysis when a real crisis arrives.
Why General Counsel must work with strategic communications advisers
I have previously argued that General Counsel and communications advisors cannot operate in silos.
Legal victories can be hollow if they leave trust in tatters, and numerous examples illustrate this. My piece on why GCs and communications advisers must work together sets out how legal risk and public risk interact, and why joint scenario planning, reputational due diligence for deals, and aligned litigation and public messaging are non-negotiable. Boards should mandate this collaboration and verify it through joint training, shared playbooks and combined briefings to the board.
Practically, that means the GC should be part of reputation stress tests, and the CCO or reputation adviser should have unfettered access to legal counsel, ensuring that messages are both legally sound and reputationally effective. This pairing matters at every stage: pre-deal diligence, M&A integration, regulatory response and crisis response.
In fact, a good number of law firms work with reputational advisors to ensure that their clients receive the best possible counsel to ensure that the impact on intangible assets does not damage tangible and valuation.
What business and management education must do next
Business schools and executive education are habitually late to reflect commercial change. Leaders are coached and trained in many business schools, thus creating the need to re-evaluate and rethink of how reputation is taught within the curriculum. Here are three recommendations:
Integrate reputational risk into finance and strategy modules. If intangible assets dominate market value, then reputation should be taught as discounted cash-flow models. Students must learn to quantify reputational exposures and the consequences of poor stakeholder management.
Teach multi-disciplinary decision-making. Scenarios that mix cyber, regulation and social media must be standard case work. This requires collaboration between faculties: strategy, law, communications, technology and geopolitics.
Train for public leadership. Senior executives will increasingly act as corporate diplomats, critical in today’s growing multipolar world. Education should provide practical media and stakeholder training that simulates the pressure of real crises and the ethical trade-offs leaders will make. FleishmanHillard rightly highlights that leaders often feel isolated and underprepared; simulation-based learning helps address this issue, as well as ensuring that a modern-day board has the insight and expertise that reflects a world with more friction.
Executive programmes must also widen admissions criteria: bring in serving board members, experienced communications leaders and senior legal counsel as both students and faculty. That will make the teaching immediately more practical and relevant.
A brief note on measurement and perception
Modern measurement makes reputation manageable. There are now robust tools for sentiment analysis, issues tracking and stakeholder mapping. Use them, but do not mistake data for judgment. Measurement should inform board decision-making, not replace it. Context and scenario testing is even more critical today for companies and investors.
Two further points matter. First, the growth in value derived from intangible assets means reputational shocks are more expensive than ever. Analysts and investors will take note, and markets will incorporate reputational risk into their valuation.
Second, the public’s expectations of corporate behaviour remain fluid. Surveys show that business remains one of the more trusted institutions, but that trust is still fragile and varies by market and context. Boards should therefore assume that stakeholders will quickly judge actions, and that misreading cultural dynamics can be expensive.
A realistic call to action
Boards are not failing because they don’t have suitable people. They are failing when they rely on models and skill sets that were built for simpler times.
The FleishmanHillard report is valuable because it translates that reality into evidence and practical recommendations. Boards, chairs and senior executives should act now to:
Reassess board skills and bring reputation expertise closer to the governance centre.
Make reputation a governance metric with regular reporting and scenario tests.
Institutionalise cross-functional crisis decision-making and regular rehearsal.
Require GC and CCO collaboration as part of board assurance.
Insist that executive education reflects the multi-dimensional nature of modern risk.
If you lead a board or advise one, this is not a theoretical conversation. It is a practical governance upgrade. The cost of inaction is clear: avoidable damage to EBITDA, market cap and the trust that powers long-term growth. The alternative is management by crisis, where companies survive by luck rather than design.
