(WO) – Only 6% of energy companies have a crisis communications plan, a far lower share than in comparable sectors, according to new research from UK reputation, risk and crisis advisory firm Alder. Confidence remains high, however. Sixty-two percent of energy respondents said they were “very confident” their organization could respond effectively to a major reputational incident, such as a data leak, a misinformation campaign by a hostile group or public whistleblowing. Another 28% said they were “fairly confident.”
Alder’s survey of 250 business leaders found that energy companies take reputational risk more seriously than most on paper. Among energy respondents, 72% said their company ranks reputational risk above most other strategic risks, compared with 58% across all sectors. Also, 74% said their organization has a formal, company-wide definition of reputational risk, versus 66% overall. Preparation lags behind that awareness. Fewer than a quarter (24%) of energy firms have a board-level crisis escalation process. Energy respondents named an average of 1.8 types of reputational defense mechanisms, compared with 2.1 across all sectors. Only 44% have an established AI governance framework, despite concerns about a range of AI-related reputational risks.
Simon Thomson, former CEO of Cairn Energy and now a senior adviser to Alder, which commissioned the research, credited the sector with rigorously modeling, testing and rehearsing its response to operational failures and safety issues. He added that reputational risk gets more board-level attention in energy than in some other sectors. “But recognizing a risk is different from being prepared for it,” he said. “The fact that so few firms have a crisis communications plan or board-level escalation process suggests the reputational dimension still lags behind.”
The survey also identified what Alder calls a “distance trap”: the leaders furthest from risk management processes are the most confident in their organization’s preparedness. Across all sectors, 66% of general leaders, including CEOs, CFOs, COOs and managing directors, were “very confident” their organization would handle a major reputational incident effectively. That compared with 43% of those in specialist risk and compliance roles. On average, specialists named 2.5 reputational risk processes or policies at their companies, versus 1.7 for general leaders. Specialists also identified more AI-related risks, an average of 2.3 versus 1.7. The top AI concerns were employees using AI inappropriately, deliberate AI-generated misinformation and large language models giving incorrect information about the organization.
“We suspect that many energy firms may be liable to fall into the reputational ‘distance trap’—a gap between board-level awareness and actual preparedness,” Thomson said. “Senior leaders may feel that they’re prepared for reputational risk because they know there’s a definition in place, and it’s a frequent item on their meeting agendas. But that’s very different from equipping the relevant people—heads of risk, compliance teams, external affairs directorates and so on—with what they need to properly assess and plan for the reputational risks facing them.”
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