Nike has been linked to a series of high-profile sportspeople who have
fallen foul of moral and legal codes in recent years. Think Tiger Woods, Lance
Armstrong and the most recent example of Oscar Pistorius. Has Nike's misfortune
been down to bad luck or bad risk management? Well, it can be convincingly put
down to sheer bad luck. Beattie Communications director Chris Gilmour says that
"when you are using brand ambassadors you are dealing with a human being who
has faults and failings… Brands should research the individuals as much as they
can, but there are certain things that just can't be predicted". The Oscar
Pistorius case is a prime example of something that was very hard to
From the moment such a crisis hits, the way in which a brand reacts reflects
directly on its core values and ethos in the minds of consumers, says
Professor Vince Mitchell of Cass Business
School. Risk managers need to act quickly and decisively in response.
The longer indecision goes on, the more damage a brand's reputation is likely
to suffer. Indiscretions that hit the press for a week but then disappear are
not of great concern. However, as in the Pistorius case, a trial can run and
run. New revelations come to light and the story remains in the public eye. It
is extremely difficult to mitigate against such a risk. Perhaps the only course
of action is to cut the ties between the brand and the brand ambassador as
quickly as possible.
In the wake of scandals with ambassadors, some companies choose to suspend
their contract rather than immediately terminate it. Professor Mitchell
believes this is a dangerous strategy. "This is about not having a Plan B. You
can ride the wave of a brand ambassador going astray if you are willing to
hedge your bets. Some think the problem might just be a flash in the pan. Not
having a Plan B means they are left thinking "We have no-one to replace this
ambassador, so let's hope the problem passes". The two things are interlinked,
and it gets to the issue of indecisiveness".
Companies are willing to take the risk of using brand ambassadors despite
understanding there are risks attached, because they are seduced by the
combination of power and talent. Professor Mitchell says "The greater the
endorsing power and the longer you have the ambassador, the longer your
reputational risk. This is because they become intertwined with the brand". He
suggests shorter contracts to mitigate risk to reputation; two to three years
for example. After that he suggests finding someone of equal stature, but
moving onto another personage will keep the brand association lighter.
It is also advisable that risk managers work more closely with marketing
when brand ambassadors are being discussed and touted.
The popularity and widespread use of social media has meant that brands are
vulnerable to repeated and prolonged attacks on their reputation. Although only
a small proportion of brand ambassadors do transgress, the power of social
media connectivity means the likelihood of them being caught out has increased
enormously. The message to brand managers is "Beware!"
A version of this article first appeared in StrategicRISK (April 2013).