Brand Risk was identified as the number one global risk management concern in a survey by AON Risk Solutions. Indeed, in the age of fake news and widespread social media use, control over a company’s image and reputation is increasingly tenuous while the types and scale of brand risks appear to be ever growing and evolving. However, brand risk management is an area that continues to be under supported in terms of research, training, and resources.




In the general sense, brand risk are the threats and potential factors that threaten the value and equity of a brand. As outlined by Young & Rubicam, Brand Value typically consists of four components: 


Brand Esteem - the brand’s reputation, how do customers regard the brand

Brand Knowledge - customers’ understanding of the brand

Brand Differentiation - how a brand differs from its competitors

Brand Relevance - how appropriate and important is a brand perceived for a given consumer market segment


Weakness in any of these four areas can significantly lessen the brand’s value.




  1. Brand Esteem: Staying Ahead of Scandal

  2. Brand Knowledge: Not All Publicity is Good Publicity

  3. Brand Differentiation: The Importance of Standing Out

  4. Brand Relevance: Addressing Needs

  5. How Artificial Intelligence Can Help




Risk to a company’s reputation and customer esteem is perhaps the most common association with the term brand risk. Harm to a brand’s reputation can lead to financial loss, loss of customer confidence, and, in some cases, even expose the company to litigation. 


Traditionally, this has primarily been a concern via mainstream media, where there is a measure of awareness of the scope and specifics of negativity or allegations facing the brand. However, with the rise of social media and its role in advertising and customer feedback, companies have less visibility, less predictability, and less control over the full range of factors influencing brand esteem and reputational risk. Social media also enables campaigns, protests, and boycotts against a brand to be mobilized more quickly and effectively and across a wider geographical area.


Beyond social media looms a related threat: fake news. Brands’ reputations are at risk from fake news both as a potential target and as a perceived propagator. Brands can be the target of fake news in the more traditional sense of fake stories about a brand’s product, services, or personnel, or if bots are being used to artificially amplify an online protest or hashtag movement against a brand.


Additionally, if a brand is seen to be supporting a purveyor of fake news - whether through direct funding or simply by having an advertisement placed on a page for a fake news story - this can negatively impact consumer’s views of the company’s morality and lower brand esteem. In a world where advertising placement is frequently determined by algorithms, the latter can happen without the company’s knowledge or consent.




To a certain extent, brand knowledge supersedes other concerns associated with the concept of brand risk. Customers need to be able to recognize the brand and be able to associate the brand with products and/or services it provides.


But does this lead to the old adage that all publicity is good publicity? Not necessarily.


As discussed above, scandal can cause massive negative publicity, resulting in loss of customers and, as a result, loss of brand value. But negative brand knowledge doesn’t have to be quite that severe to negatively impact brand value. For example, if target customers’ knowledge and awareness of the brand doesn’t match the image the brand wants to project, companies could be losing out on business. This can be the result of unsuccessful marketing campaigns, the introduction of a new product, or even the more amorphous and hard to fight cultural connotations.


If a knowledge of a brand is too rigid or overly tied to a single industry, product type or consumer group, it can hamper growth and expansion, leading to what is known as brand stretch risk: the risk of a brand stretching too far beyond what consumers ‘know’ about the brand. This can be the simple case of consumers being unable to conceptualize a product that deviates too far from their established brand image or can be more severe: that they are attempting to expand into a product or service that directly contradicts with what consumers “know” about the brand’s values and priorities.


It’s not enough that consumers know about a brand.  What they know should be aligned with what a company wants them to know. Moreover, decisions a company makes should be made with established consumer brand knowledge in mind.



A risk related to brand stretch risk is brand dilution risk. By introducing new types of products or services, brands are not only at risk of stretching beyond what consumers know about them, but also muddying what they offer, what they stand for, and/or who they’re for. For example, luxury brands that offer discounted or lower price options are in danger of running into the snob effect, in which their products are no longer seen as exclusive and, therefore, not worth buying. Whether it’s diluting the concept of the product itself or in muddying who the target consumer is, losing what makes a brand special in consumers’ eyes is a real risk to be weighed with possible expansion.


A related risk is brand cannibalization - when the lack of differentiation is between two offerings by the same company rather than a lack of differentiation between a company and its competition. This frequently happens with discounted offerings within the same company - if there is perceived negligible difference between two offerings of differing prices, the lower priced offering will “cannibalize” the higher priced ones.




Of course, it doesn’t matter how much a brand stands out from the competition if none of the differentiating factors are relevant to their target market segments’ needs in terms of services offered, price, and convenience. Strategies that address threats to brand esteem, knowledge, and/or differentiation must constantly keep brand relevance in mind. A well known brand without a bad reputation that offers a fairly unique product or service can still be weak if it’s a product that no one finds important.




Social Media doesn’t have to be the enemy. While it certainly can be leveraged against brands, it can also be an incredibly helpful tool to examine and monitor all four elements of brand value and, therefore, any potential risks. Indeed, consistent monitoring, early action, and proactive planning are the leading suggested practices for mitigating brand risk.


By leveraging social media sentiment analysis and concept clusters, companies can:

  • Track the impact of a scandal or negative publicity

  • Determine overall brand awareness and discussion

  • Track reactions to the introduction of a new product or service

  • Determine the extent to which the brands perceived image matches the one they wish to project

  • Analyze how a brand stands against the competition

  • Monitor the sentiment around not only the brand itself but also related personnel and other VIPs, whose reputations might impact the brand itself


Artificial intelligence can also be leveraged to identify bot activity with the goal of exposing the artificial amplification and shutting down the bot accounts. Relatedly, companies can use deep learning programs to identify fake news stories based on both writing style and content to proactively avoid advertising on such pages.


Technology and AI can give companies visibility on an ever-evolving landscape as well as give them the tools to combat new and emerging threats.