Riskd – Risk Management Blog

At this age of reduced pricing, increased quality, optimized workforce a differentiating factor for any company is how they are perceived by their existing customers and by the public in general. ‘Reputation’ matters.

Reputation may be an intangible but it is a highly prized asset, often equated with the goodwill of the business. For the majority of enterprises it is seen as the most critical risk. One of the major reasons for this is measuring this and putting a price on this considered more of an art than a science. And very few companies have mastered this art.

The CEO may be directly responsible for the management of reputational risk, this is normally shared with the Board of Directors, while deploying a number of functions such as corporate communications in its day-to-day operational mode.

There is, however, some consensus on the key elements of managing reputational risk:

• Prompt and effective communication with all categories of stakeholder – shareholders, employees, customers and suppliers.
• Strong and consistent enforcement of controls on governance, business and legal compliance.
• Continuous monitoring of threats to reputation.
• Ensuring ethical practice throughout the supply chains.
• Establishment and continual updating of a crisis management plan and establishment of a crisis management team, empowered with specific power and authority.

Controlling reputational risk through a managed or controlled way is very possible, a marketing and PR division of an organization should be involved in all aspects of setting this up.