Sponsors assess risk exposure as brand IPL takes a massive hit

MUMBAI: At a time when one comment on social media can wipe off millions on the capital market, the Indian Premier League ( IPL) may just be at a substantial risk if the national cricket board doesn't take immediate corrective action, say risk advisers.

"IPL is just a nomenclature. So while the 20-over cricket as a sport may not be impacted, IPL may see its brand value erode due to the recent controversy (over match fixing and betting). The only way right now for the BCCI is to come out in open with honest communication and basically also distancing itself from the controversy," said a partner for risk advisory at a consultancy firm.

People close to the matter said some sponsors were already looking at the risk exposure to their brands due to the IPL controversy. Industry trackers said often the biggest risk for the companies is due to social media and the way consumers react to information on these platforms. Many companies are already evaluating the reputational risks that social media could pose."Sponsors, even those who are not associated with the teams and players named in the controversy, are assessing their risks," said the partner.

"Most companies are evaluating reputational risks that could be caused by change in regulations or through information on social media. Several companies today rely on social media to evaluate their brand or product perception," said Mritunjay Kapur, partner and head of risk consulting at KPMG India.

Many in the industry are asking whether IPL could go the Maggi way where the product's reputation was hugely affected due to just one controversy. According to experts, the inability to react to a situation causing reputational risks could finish a brand. "If hit by an untoward event, they must quickly demonstrate that they have strong core values and the right intent, and that the event was just a one-off," said Manesh Patel, partner, advisory services, at EY.

"In the globalised economy, the only differentiator between products is the brand. And when a controversy like what hit Maggi or IPL hits the brand, consumers could quickly move to another brand," said the partner working on risk advisory.

The reputational risks could also keep away some of the potential buyers of the teams. "At a time when the regulatory environment is becoming stricter and consumers are becoming more aware of their power and also increasingly active on social media platforms, a small event can trigger huge reputational risks for companies. Hence it is critical for companies to assess such risks," said Patel.