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Mark Eating

What is Reputational Risk? And should you worry about it?

Reputational risk is any threat to your brand’s reputation as it is perceived by customers, employees, and other stakeholders including investors, regulators, partners and auditors that would result in a risk of loss, financial or otherwise.

If stakeholders are being flooded with bad reviews, negative press, the knock on effects of unscrupulous actions, or even perceived threats such as untrue accusations: your reputation will be harmed, however stable you may think it is. Bad news travels fast and wide thanks to social media, reaching your stakeholders directly, with disastrous effects if you do not have measures in place to reduce threats or see them off entirely.

Global risk consultancy Deloitte recently conducted a survey, and they discovered that “Eighty-seven percent of the executives surveyed rate[d] reputation risk as more important or much more important than other strategic risks their companies are facing.” Reputational risk should, therefore, have at least the same priority as financial and compliance risk for example; and the creation of the position of Chief Reputation Officer proves that this need is getting noticed.

Reputational risk is a very real threat, and it cannot always be foreseen or be planned for. So how can you move from reacting to a crisis when a threat to your reputation occurs, to continually managing risk and maintaining your reputation?

Become pro-active to be reactive, rather than reacting to the latest fire drill to hit your company.

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