Integrating risk literacy into brand management

Abstract

Purpose

The purpose of this paper is to integrate brand equity into companies’ overall risk assessment by suggesting a methodology of evaluating the relevant aspects of brand risk.

Design/methodology/approach

Based on a theoretical framework which discriminates between brand assets, brand strength and brand value, this paper set two alternative directions that can be followed to assess brand risk: a financial direction, which accounts on brand value, and a marketing direction, which stresses on brand assets and brand strength. Following the latter one, this paper provides mathematical formulas which contain specific factors of volatility that can be integrated in a future scoring system.

Findings

This paper proposes four major risks that need to be considered when evaluating brand assets risk: reputational risk, presence risk, loyalty risk and halo effect risk. This paper provides an evaluation methodology for each one. In addition, a 12-step implementation model is proposed as a managerial guideline for integrating brand risk in the companies’ risk management.

Originality/value

This paper emphasizes the importance of considering brand equity as a potential source of risk and thus integrating it into risk management. Also, we continue Abrahams’ pioneer work on adding risk literacy into brand management.

Citation

Florea, D.-L., Munteanu, C.-C. and Postoaca, A.-E. (2016), "Integrating risk literacy into brand management", Review of International Business and Strategy, Vol. 26 No. 2, pp. 204-218. https://doi.org/10.1108/RIBS-02-2014-0025