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One Slip, You Dip

Managing reputational risk is a corporate priority in an era of corporate malfeasance, scandal and heightened risk

By Jeff Derose | Updated on July 25, 2007

During the winter of 2007, TJX Corp. and JetBlue, two companies with relatively untarnished reputations, found themselves in the midst of corporate crises. TJX was forced to acknowledge that hackers had breached its data security systems, stealing nearly 46 million customer credit card records from its popular T.J. Maxx, Marshallsand HomeGoods stores. A few weeks later, JetBlue took a beating when severe weather in the Northeast wreaked havoc with air travel, stranding several JetBlue planes and hundreds of passengers on runways for up to 10 hours in some cases.

The stock prices of both companies suffered. TJX was threatened with class action suits and regulatory action, while JetBlue suffered the humiliation of losing its BusinessWeek top customer satisfaction position on the cover of the March 5 issue. Even though the crises were relatively short-lived, the companies are only just now emerging from their wake–both finally beginning to once again outperform their industry group. As Warren Buffett once said, “It takes 20 years to build a reputation and five minutes to ruin it.”

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