Halal crisis management: how best to protect your corporate halal reputation?
Halal reputation management
Negative publicity about a halal incident becomes a threat to both sales and corporate reputation. In a highly connected world, a halal issue can easily snowball into a halal crisis. Companies should expect a halal crisis every 10 years, which could result in lost sales in the range of USD 10-50 million for multinational companies, USD 5-10 million for large companies, and up to USD 5 million for SMEs. Moreover, corporate reputation accounts for approximately 20 per cent of the market cap of a company; in terms of corporate reputation damages, therefore, the lost value associated with a halal crisis could easily be triple that of lost sales. In other words, a good corporate halal reputation is of great value but needs to be well protected. So, how best to protect and optimise your halal reputation asset?
Halal is not static but in fact dynamic, moving away from a product approach (focus on halal certification of product & ingredients), towards the entire halal supply chain and business value chain. This evolution of halal requirements come together with more stringent halal regulations by leading Muslim (majority) countries for manufacturers and new halal standards, like Malaysia’s halal supply chain management system standard (MS 2400:2019). Halal reputation management has become more complex for organisations. Hence, corporate halal risks and reputation performance should be on the corporate radar screen!
Halal reputation is a journey, starting with regarding halal reputation management as a problem to be addressed urgently, viewing halal reputation as an asset, considering halal reputation as a competitive advantage that can increase sales, and representing halal reputation management in the boardroom. Setting halal reputation objectives by top management, related to the halal reputation journey, is an essential first step in halal reputation excellence.
What is a halal crisis?
With a halal issue in Muslim markets, a whirlpool easily becomes a maelstrom, with a vortex dragging companies under. The lifebuoy thrown by corporate communication often has no lifeline attached due to the many gaps in the crisis manual and in halal crisis management practices. The trigger of a halal crisis, a halal issue, can be contamination, non-compliance, or a perception issue. In the case of contamination, consumers could be ‘poisoned’ with haram ingredients and wonder if they can trust the brand again. A non-compliance issue puts the halal status of a product in doubt, something Muslims should, according to their religion, avoid. With perception issues there is a possible mismatch between perceived brand image and the Islamic way of life. All three of these halal issue classifications have the potential to snowball into a global halal crisis, where corporate halal reputation comes under attack. This situation demands quick action and communication from the brand owner in order to reduce damage to sales and reputation.
Effective halal crisis management requires systems in place for (1) risk prevention to reduce vulnerabilities in creating a robust halal supply chain; (2) response management to isolate the halal issue and minimize the severity of the issue; and (3) restore corporate reputation or social capital of the brand: halal trust, Islamic values, and network.
Halal crisis management tools we offer brand owners
Halal risk and reputation design
LBB assists brand owners in a halal risk vulnerability assessment, halal supply chain and value chain (re)design, and (re)design of halal assurance system and halal crisis manual. We also help brand owners in the implementation of professional halal risk and reputation management with the right key performance indicators.
Halal risk report
The Halal Risk Report provides essential halal risk and market intelligence for top management of brand owners serving Muslim markets.
The Halal Risk Report consists of three components:
- Halal risk assessment: analysis of halal risks with proposed counter measures & control measures
- Halal risk and reputation performance: measurement of the key performance indicators, such as halal maturity, halal trust, halal reputation index, licence to operate, and halal rating
- Conclusions and recommendations: key findings and practical action plan
The Halal Risk Report can be produced according to the board meeting cycles, e.g. quarterly, bi-annually, or annually.
Halal S.O.S.
LBB has a team of halal experts available to help brand owners in halal crisis management.
We provide brand owners a comprehensive Halal S.O.S. solution to better protect your brand in Muslim markets. Halal S.O.S. assists the holding company and local OpCo in (1) halal issue management, (2) navigate during a halal crisis, and (3) aid in halal reputation repair for halal certified brands. We offer Halal S.O.S. both on an annual subscription basis as well as one time purchase of halal crisis management support.
Why LBB International?
LBB has been privileged working for leading local and multinational brand owners on their halal strategy, halal supply chain, and halal risk and reputation management. We have extensive experience with the food, cosmetics, homecare, and pharmaceutical industry. Our halal solutions are based on extensive research, continuous dialogue with leading halal authorities, and experience working together with visionary brand owners that want to embrace halal into their supply chain and business value chain.
For more information on the halal risk & reputation design, halal risk report, and halal S.O.S., contact us at info@lbbinternational.com.
Read more on halal crisis management:
Why halal reputation matters for halal ingredient manufacturers: http://lbbinternational.com/2022/09/22/why-halal-reputation-matters-for-ingredient-manufacturers/
Halal reputation management: an afterthought to halal certification: http://lbbinternational.com/2022/06/22/halal-reputation-management-an-afterthought-to-halal-certification/
The four pillars on halal crisis management: http://lbbinternational.com/2021/07/01/the-four-pillars-of-halal-crisis-management/
Halal business management: a guide to achieving halal excellence: https://halalbusinessmanagement.com