Halal Risk Report: building the world’s trusted halal brands

Due to a large, young and fast-growing Muslim demographics in combination with a substantial and fast expanding global Islamic economy, Muslim markets in the Middle East and Asia are one of the leading consumer markets today. Doing business in Muslim markets means next to food and product safety also meeting changing halal requirements.

Most companies leave halal performance measurement to the internal halal committee based on tracking of purely operational indicators, such as non-conformity, complaints, and incidents. Halal risks and reputation management is of increasing importance for doing business in Muslim (majority) countries and not a responsibility of the internal halal committee, but that of top management. Effective monitoring and control of the halal risk and reputation performance are therefore essential for the CEO and board of halal certified companies to protect the financial, operational, reputation and regulatory performance of the company.

The CEO and board of directors need to understand the complexity and sophistication of current business risks in order to respond intelligently. You cannot rely solely on a general management risk report, but also need to develop a specific view of risks, such as halal risks. The Halal Risk Report provides the CEO and board members with the latest insights into the halal risks and analysis of your key Muslim market(s). Specifically, the Halal Risk Report presents you with a halal risk assessment and the halal risk and reputation performance.

There are five halal risk and reputation key performance indicators: halal maturity of your organisation, trust of your brand, your corporate halal reputation, your licence to operate, and corporate halal rating.

Halal Maturity

Halal is not static, but halal market requirements are moving away from a halal product, to a halal supply chain and halal value chain approach. Hence, it is essential that the halal maturity of your organisation is matching or ahead of its halal market requirements of your key Muslim markets. The halal maturity assessment evaluates 21 criteria and provides the halal maturity score of the organisation on halal product, halal supply chain, and halal value chain. This assessment will reveal the organisation’s main position and performance achieved in each area.

Halal Trust

Trust in halal is an important factor that influences consumer purchasing decisions. Halal trust is the belief of the Muslim consumer in the halal integrity of the product or service in accordance to his or her faith. Halal trust is an assessment of the Muslim consumer perception of a brand, the so-called halal image of the brand. The halal trust of a brand is measured through a consumer survey, analysing the consumer perception of the halal logo, excellence, transparency, halal authenticity, and intention. The halal trust assessment is conducted for your brand and possibly benchmarked with selected competing brands in your key Muslim markets.

Halal Reputation Index

The Halal Reputation Index (HRI) is a quantification of the halal reputation of an organisation based on an assessment of a number of factors, which drive and predict the corporate halal reputation of a company and sales. HRI is the new key performance indicator for companies operating in Muslim markets, and an essential measurement of achieving halal excellence. The HRI is based on an algorithm using four halal reputation drivers: halal authenticity; trustworthiness of halal certification body; messages by company and supply chain partners; and messages by external stakeholders. The HRI is measured through an internal audit and external assessment.

Licence to Operate Rating

Companies serving Muslim markets need to earn their licence to operate. Key drivers for the licence to operate is the ability to anticipate halal market requirements, address them through a solid halal authenticity, a trustworthy halal certification body, the right messages by the company and supply chain partners, and positive messages by external stakeholders. Changes in halal requirements, such as a new halal regulation, halal standard, fatwa (religious ruling), or a revised list of which halal certification bodies are recognised can immediately change your LTO rating. Monitoring your LTO rating is a critical key performance indicator for your key Muslim markets, and a measurement of the stability of your halal assurance system. LTO is measured by assessing the emerging halal market requirements of your key Muslim market(s) and relating this to your HRI drivers.

Halal Rating

The halal rating provides the organisation with an overall halal integrity risk profile of the company. LBB International rates the organisation ability to protect the halal integrity and the likelihood of non-compliances. The halal rating scale has been developed by our firm based on extensive research on corporate halal risk and reputation management. Monitoring the halal rating of your organisation is essential to prioritise CEO and board decisions on halal risks. The corporate halal rating can also be used in your corporate reporting and external communication.

The Halal Risk Report provides essential halal risk and market intelligence for brand owners serving Muslim markets. We have produced the Halal Risk Report for leading halal certified brand owners in the food and cosmetics industry. For more information, contact our halal risk and reputation management advisors at LBB International.