REPUTATION RISK MANAGEMENT – THE IMPORTANCE OF EFFECTIVE ETHICS POLICIES
RC: How would you characterise the importance of a company’s reputation in today’s business world? To what extent are risks increasing that could damage those reputations?
Reisman: We are seeing businesses impacted by a multitude of disruptive forces and megatrends globally, each requiring a different response to manage the associated risk. Organisations are challenged with developing a comprehensive view of risk, as well as regularly identifying and responding to existing and emerging risks. We expect and are seeing organisations make investments in their risk management capabilities not just to protect the organisation, but also to create value. Mature risk management recognises that the rapidly changing risk landscape not only creates challenges, but also presents opportunities. Organisations that manage risk well are better positioned to capitalise on the upside potential of risk.
RC: In your experience, are companies in general doing enough to safeguard their reputations against the many threats they face?
Rogula: From our 2015 governance, risk and compliance survey research, we concluded only 61 percent of respondents are using some form of risk monitoring to identify trends or risks that may impact their organisation’s business strategy and reputation. Companies are looking to develop risk management frameworks that enable them to shift their focus with regard to how they identify and respond to the reputational risks they face, with both positive and/or negative impacts, and best respond to each risk appropriately. Let us look at the example of social issues – to safeguard against a social issue, organisations should internalise the issues to ensure commitment and consistency to social performance. Additionally, the organisation needs to establish capabilities to monitor, detect and respond to social media, both positive and negative.
Oct-Dec 2016 Issue
Ernst & Young LLP