Reputation Risk

According to Harris Interactive, a firm that conducts annual “reputation surveys, 71% of the adults in the United States think that corporate America’s reputation is either “not good” or “terrible.” The former Chairman of Lloyds of London reported almost a decade ago that loss of reputation is the second most serious threat to an organization’s viability (business interruption being the first). Because a company’s reputation impacts its relationships so broadly, internally with its employees and shareholders and externally with its customers, vendors, and peer groups, it needs to be recognized and managed systemically rather than in a series of periodic and discrete activities. Managing reputation risk systemically includes: managing the company’s reputation as part of its role in setting the tone at the top; formalizing and communicating reputation risk policies and procedures; implementing a risk management plan that includes mechanisms for unencumbered decision making and maximum speed of response; and working with the executive team in scenario planning to anticipate specific reputation risks.