Reputation remains a top concern for firms around the world. But many risk mangers are struggling to measure and mitigate the risk due to its inherently intangible nature
The key reason that ‘damage to company reputation/brand’ rated so highly in the 2015 StrategicRISK survey may well be that almost all roads lead to brand risk.
Supply chain interruptions, corporate social responsibility, media events, natural disasters, bribery and corruption all have the potential to impact a brand’s reputation. And in a hyper-connected age, bad news travels fast. Any brand damage can happen quickly and severely. So what does that mean for risk managers today?
Rudi Wertheim, the director of corporate risk and reputation, greater China, for InterContinental Hotels Group, says that the most pressing task for risk professionals is to measure and quantify the value of a firm’s reputation.
“Reputation risk may no longer be intangible and unquantifiable,” he says.
“In the future, the performance of corporate directors will be measured by reputation metrics and on feedback from stakeholders and customers,” he adds. “No matter how good your reputation is, there are always opportunities and potential to improve it and obviously any one incident can have pretty catastrophic impact.”
Keeping on top of emerging threats is crucial to managing reputation risk, Wertheim says.
“I want risk owners to focus on emerging risks – the threats that are coming up that could hurt the company,” he says. “I want to help people identify those [threats] and make them think how they will challenge the business and how those challenges and threats can be turned into opportunities before they hit us.”
Wertheim highlights three key issues that are potential roadblocks to effectively managing a firm’s reputation. These are: companies that do not have a structured process for getting ‘reputation thinking’ implemented into their business planning; companies that are not leveraging the knowledge they have to be relevant to each stakeholder group; and internal silos which prevent cross functional collaboration.