Just as important, since its acquisition of Carter-Wallace, it's also manufacturing a growing variety of products that don't utilize the Arm & Hammer brand name. Among them: Arrid antiperspirant, First Response Home Pregnancy and Ovulation Test Kits, and NAIR Depilatories.
  
Arm & Hammer's "don't mess with us" message is intended not only for senior executives and other employees but for any stakeholder or others who might want to take advantage of the company's reputation or damage it in any way.
  
"Reputation and risk management has been on our board's agenda ever since I joined it in 1969," says Dr. Rosina (Nina) B. Dixon, director and chairman of the company's compensation and organization committee. "Ours is one of the 10 most recognizable brands worldwide."
  
Adds John O. Whitney, who also sits on Church & Dwight's board as well as that of privately held giant Turner Construction, "Reputation risk management is incredibly important to us. The first concern is consumer reaction; the second is the Street's reaction. We're looking at reputation as an important asset of the company. It's not an agenda item every time during board meetings, but it's always present as an issue. It has been that way for 100-plus years. When a company has so many products, you have to be ready for the worst," adds Whitney, who authored The Economics of Trust: Liberating Profits and Restoring Corporate Vitality.
  
Indeed, the company, with roots dating back to 1846, has always shown interest in protecting the reputation of both the Arm & Hammer name and its overall reputation. Now, in the aftermath of the past two years of accounting, auditing and governance scandals, the company has become even more aware of the value of its brands and corporate name, reinforcing a long-held view that reputation is the company's most important asset.
  
To date, the organization has been fortunate to not have dealt with any major fiascos; it has worked hard to head off problems. And, despite its growing concern about keeping its stellar reputation, it makes clear that it's not afraid to continue taking risks, even though Whitney worries that, for many U.S. corporations, that may be one unfortunate result of legislation like Sarbanes-Oxley. "I think companies have got to be careful that they don't get so afraid of things that they no longer take chances or risks," he says.

Board's burgeoning concerns
Church & Dwight isn't alone in its concern. Following major crises (some of their own making, some not) companies globally have seen their brands and corporate names pummeled by media and stakeholders. Now, some companies have begun putting together proactive programs designed to not only minimize negative fallout after a disaster but to greatly reduce the possibility that one will occur.
  
"A good reputation is an asset; it's an intangible asset, but an important one," says Reatha Clark King, chairman of the board and former president of the General Mills Foundation, as well as a corporate director at ExxonMobil Corp., and Minnesota Mutual Cos. Inc. "Sometimes people have a perception of things that aren't true, but if they get out, they can be very damaging. Public trust is a very important concern. You can't produce it overnight; it's not a swap for a PR campaign.
  
"You have to try to shape things so you don't have a crisis," King continues. "You want to help management anticipate a crisis so it can minimize the chance that a disaster will occur."
  
Adds Marilyn R. Seymann, president and CEO of Phoenix, Ariz.-based consulting firm M One Inc. and co-author of The Governance Game, "Most of us are spending a lot of time reviewing our risk programs from a technical as well as a reputational point of view. With every decision the board makes," she says, "the question isn't just, 'legally, is this doable?' but 'what are the options?' This is synonymous with asking: 'What's the risk to our reputation?'"
  
Seymann, who is also current chairman of the board at South Dakota-based utility NorthWestern Corp., adds: "It's harder and harder to isolate risk; …it's harder to manage. Then it's harder to control its impact on reputation. There are risks all around; it's like an infectious disease. There are things that can be huge reputational damagers: How do you anticipate another Tylenol?"

Proactive reputation management
It's understandable that at least some board members are beginning to recognize the importance of reputation. On the positive side, companies with superior reputations are known to outperform the market and competitors on a consistent basis. "Firms with strong reputation equity can outperform the market by over 100 percent," notes Dr. Deborah Pretty, a principal of Oxford, England-based Oxford Metrica and author of Risk, Financing Strategies: The Impact on Shareholder Value.
  
On the negative side, there's little doubt that disasters of any sort - man-made or natural - immediately affect stakeholder impressions, with the negative impact greatest when a company denies that it has a problem, blames it on others or approaches stakeholders arrogantly.
  
In fact, at first glance, the impact on a firm's stock price immediately following a crisis doesn't appear all that great: Initially it loses about 7 percent of its value, says Oxford's Pretty, based on a 2001 study issued by her risk consultancy firm, "Reputation & Value: The Case of Corporate Catastrophe." After that, however, "there is, on average, an apparent full recovery to market expectations in under five calendar months (100 trading days)," the report says. However, Pretty's research suggests that the net long-term impact on stock returns is negative 4 percent by the end of the first post-event year.
  
And recovery comes with a significant caveat: The ability to recover lost shareholder value over the long term varies across firms. "Firms affected by catastrophes appear to fall within two relatively distinct groups, 'recoverers' and 'non-recoverers,'" the report continues. "The initial loss of stock value is approximately 3 percent for recoverers and about 12 percent for non-recoverers. So, very early on, the stock market begins to make its judgment as to whether a firm is likely to sustain its ability to generate cash flow in the future following the crisis."

Measuring the value: a tough challenge
Getting a handle on the exact value of their reputation -- not only the value of its overall reputation, but of specific brands and products -- is among the toughest challenge for corporations. Putting together hard numbers remains elusive and may be impossible, many believe.

Absent mathematical formulas, companies have turned to "soft" answers, specifically, surveys. Most-often cited: Fortune's "Most Admired Companies," as well as others put together by Financial Times, Asian Business, Management Today and Far Eastern Economic Review.
  
Also, companies are looking beyond "touchy/feely" surveys. One option is working with a consulting firm, such as Stamford, Conn.-based CoreBrand LLC, that specializes in helping multinationals determine the value of their corporate brand name.
  
With clients such as Hitachi, Standard Register, Avantis, Thomson Financial, MasterCard, Ciba and Pitney Bowes, the firm has published for 13 years a quarterly Directory of Brand Equity, designed to help corporations understand the value of their brand and leverage it. The company's "Corporate Branding Index" tracks 1,000 different companies across 40 different industries and is based partially on interviews with business leaders and 10,000 phone interviews with consumers conducted annually.
  
"Corporate brands have power," the Web site says. "Real power. Measurable power. Power you can't afford not to understand and tap. In the hands of a leader, a corporate brand can inspire a company in the same way a standard can inspire a nation."
  
According to CEO Jim Gregory, such research and data can help companies in both good times - and bad. "Our data can determine how much companies need to spend to rebuild their brand loss. "We can quantify the loss [and] determine the amount of money necessary to repair the damage, as opposed to having them simply pay for the loss." 
  
Gregory believes that, because the index has been around for more than a decade, it provides the historic basis for developing reputation insurance products - an index that could be used to help determine when an insurance contract might be "triggered." Actuaries have examined the product with that in mind, he says.
  
Meanwhile, Oxford Metrica has come up with a specific mathematical formula for determining shareholder value, and how reputation risk management fits into it.

Still in the 'baby steps' phase
Measuring brand and reputation value is only one of the challenges facing global corporations as they confront reputation risk management. Among the others:

Boards may be more aware of reputation as key, or their most important asset, but few have issued board-level directives ordering executives to design cradle-to-grave approaches to managing the risks. Nor have they formed board- or senior management-level committees dedicated solely to the subject. Whitney says he thinks "reputation committees -- in fact, all mechanisms for managing reputation -- are good ideas."

Even when companies have these directors, "silo management" stands in the way. David Brotzen, a founder of London-based reputation protection firm Brotzen Mayne, notes, "Reputation risk falls between two silos: the 'corporate communications silo' and the 'risk management silo,' each assuming it's the other guy's risk. Both want to pass it on."

Sarbanes-Oxley is a preoccupation, preempting broader efforts to manage corporate-wide enterprise risks, and, as part of that, a firm's reputation. Ironically, amid the heightened awareness of reputational issues among board members, companies are concerned primarily with meeting the financial reporting requirements, leaving little time to consider broader enterprise risk issues, such as reputation.

Many executives don't believe that managing a firm's reputation should be seen as yet another risk management area; rather, they say that a good reputation derives from superior management of day-to-day and longer-term decisions throughout the organization. More specifically, a great reputation is a direct result of a superior corporate culture and working environment, they say.

For the moment, few express satisfaction with the way companies are managing their reputations, noting that stakeholders ultimately are the losers. And some observers believe companies have made almost no progress in overall reputation management.
  
"It seems extraordinary to me that business has learned so little from its past mistakes," argues Judy Larkin, author of Strategic Reputation Risk Management, published earlier this year. "Coca-Cola learned nothing from Perrier when it faced product contamination scares in Belgium and France in 1999. TotalFinaElf learned nothing from the ExxonValdez disaster a decade before when it had to deal with a major oil spill off the coast of Brittany at the end of 1999. By the end of 2000, Monsanto had wrecked an entire industry [genetically-modified foods], as well as its own brand.
  
"Wrangling over who was to blame for a major vehicle safety failure has left the asset base of Bridgetone/Firestone in tatters and has created a serious dent in the balance sheet and reputation of Ford Motor Co., ejecting top management in the process," Larkin says. "The British rail infrastructure company Railtrack self-destructed with help from incompetent policymakers in late 2001, and confidence in corporate America has slipped in the aftermath of scandals associated with Californian energy trading, Enron and Arthur Andersen, WorldCom, Xerox, Sotheby's and Tyco."
  
Others are less critical. "Whether firms are managing reputation risk more proactively and effectively varies widely by company," says Pretty. "Some firms have recognized and embraced the significance of reputation risk and are keen to apply the insights to their own firms. Others express different priorities. A crucial ingredient for success is the explicit commitment from the board, where usually a specific board member 'champions' the initiative and communicates a sense of commercial urgency in seeing the process through."

Boards beginning to act
Boards and senior executives are taking note and beginning to study ways to proactively manage reputations. They are:

• Looking at ways to measure the value of their individual brands and the value of their overall corporate name.
• Putting together crisis management teams that can respond proactively and with a "don't lie-to-stakeholders attitude" as a crisis occurs.
• Considering new avenues for recovering financial losses after a crisis; they're examining reputation insurance contracts developed by insurers and brokers.

LAWRENCE RICHTER QUINN often writes on business and financial subjects. He can be reached at quinnmedia@yahoo.com.

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FEI's flagship publication, Financial Executive magazine, has won another award -- an Eastern Regional gold (first place) award from the American Society of Business Press Editors (ASBPE) in their annual competition. FE won in the editorial division for its March 2002 special section on "Best Practices." This is the fourth juried award FE has won in the past two years. The award was presented in Boston on Monday, June 9.