UNTARNISHED: MANAGING REPUTATIONAL RISKS
Reputational loss is a big risk for any company. Whether a business is a big, small or medium-sized enterprise, a hard-earned reputation can be lost in what can seem like a wink of an eye.
Moreover, for a business that has built itself into a strong and recognisable entity – an endeavour likely to have taken considerable time, effort and investment – a loss of reputation has the capacity to be damaging, perhaps serious enough to initiate closure.
In its 2017 report ‘The Hidden Cost of Reputation Risk: An Approach to Quantifying Reputation Losses’, Oliver Wyman defines reputational risk as: “the risk to the institution from changes of perceptions by key stakeholders, including customers, investors, and regulators. The change of perception can stem from a wide range of events but is driven by the belief that the future ability of an organisation to deliver on stated goals and performance targets will be worse than previously expected.”
In the view of Shahar Silbershatz, chief executive at Caliber, reputational risk can be split into two main categories. “There are risks that are essentially operational in nature but have reputational consequences, such as natural catastrophes, accidents, cyber attacks, product recalls and supply chain interruptions. Then there are those that are more reputational in nature, typically linked to company behaviour, such as statements by executives that cause negative public reactions, exposure of corruption or other integrity flaws.”
Jan-Mar 2020 Issue
Fraser Tennant