The Four Pillars of Halal Crisis Management

Negative publicity about a halal incident becomes a threat to both sales and corporate reputation of companies. In a highly connected world, a halal issue can easily snowball into a halal crisis. Companies should expect a halal crisis every 10 years. A halal crisis 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. The value of corporate reputation is an approximately 20% of the market cap of a company. In terms of corporate reputation damages, the lost value could be in magnitude of easily triple the lost sales. How best to protect and optimise your halal reputation asset?

A halal crisis

 

With a halal issue in Muslim markets, a whirlpool easily becomes a maelstrom, with a vortex dragging companies deep under. The lifebuoy thrown by corporate communication often has no lifeline attached due to many gaps in the halal crisis manual and halal risk management. The trigger of a halal crisis, a halal issue, can be classified as contamination, non-compliance, or perception issue. In case of a possible contamination the consumer could be ‘poisoned’ with haram and wonders if he can still trust the purity of the product and brand? A non-compliance issue, puts the halal status of a product doubtful, which Muslims, according to their religion, should avoid. With a perception issue there is a possible mismatch between perceived brand image and the Islamic way of life. 

 

All three halal issue classifications have the potential to snowball into a global halal crisis, where the corporate halal reputation is under attack. This situation demands quick action and communication from the brand owner to reduce sales and reputation damages. These three halal issue classifications require specific responses to prevent an issue to progress into a crisis. As time is of the essence it is important to prepare the responses for these three halal issue classifications in advance and part of your halal issue and crisis manuals. This allows you to make better decisions and better-quality responses during a halal incident, saving companies a lot of money.

 

 

Best practice halal crisis management

 

Best practice halal crisis management is founded on four pillars: process, control, organisation, and information.

 

PROCESS

§  Halal reputation by design, creating excellence in halal authenticity, choice of halal certification body, messages by company and supply chain partners, and messages by external stakeholders

§  Combination of individual and collective halal reputation management strategies 

 

CONTROL

§  Halal assurance system documentation

§  Prevention: risk assessment, supply chain (re)design, vertical and horizontal collaboration, and monitoring of the halal risk and reputation performance

§  Mitigation: solid risk mitigation and communication plan

§  Recovery: solid risk recovery and communication plan 

 

Important in halal crisis management control, is to determine the halal risk profile of your company. The halal risk profile is based on:

§  Food products require more extensive risk management than non-food products

§  Products that are animal-based require more extensive risk management than products that are non-animal based

§  Suppliers from non-Muslim countries require more extensive risk management than suppliers from predominantly Muslim countries

§  Logistics service providers and distributors involved in distribution to Muslim-majority countries require more extensive risk management than for non-Muslim countries

§  Brands from non-Muslim countries require more extensive risk management than brands from predominantly Muslim countries

 

 

ORGANISATION (of halal responsibilities)

§  Top Management: halal policy and objectives

§  Board Risk Committee / Risk Management: halal certification decision and halal risk reporting 

§  Marketing: showing (or not) the halal logo on product packaging and halal branding & marketing decisions

§  Halal Committee: halal assurance system implementation and management

 

INFORMATION

§  A halal supply chain management system or conventional supply chain systems with halal management module

§  Halal reputation measurement (e.g. halal reputation index)

§  Halal risk report for management and board risk committee.

 

Conclusion

You cannot be involved in the halal industry without a proper halal risk and reputation management system in place, in order to protect your corporate halal reputation and licence to operate. A halal crisis can be an opportunity to strengthen your corporate halal trust, Islamic values, and your network. However, this is only possible with the right actions and communication with a halal issue and crisis. Best practice halal crisis management is founded on four pillars: process, control, organisation, and information. This requires solid preparation and practice.

 

For the full academic paper, visit the academic journal Islam and Civilisational Renewal.

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