Reputational risk remains one of the leading concerns of businesses around the world, according to a study from Deloitte Touche Tohmatsu Limited and Forbes Insight. The concern is justifiable because reputation affects the company’s future market value and viability. Any incident that threatens business reputation will result in financial loss.
The difficulty of measuring reputation, however, results in frequent neglect of reputational risk when planning the overall risk management strategy. Even if you have a certificate in insurance or risk management, this is anything but easy.
Reputational risk, despite its technicalities, is more of an art than a science. Unlike financial risks, you can’t easily quantify it. Rather than attempt to quantify it, observe metrics instead—red flags that signify if there is a problem.
Thank to the Internet, news travels very fast these days, and bad news travels even faster. Most companies are aware that a few bad comments from their consumers or employees can spark a movement for or against them. For example, angry rants on social media will spread like wildfire. Attempting to monitor this is essential but difficult, especially with technological assistance.
Fortunately, there are quick and subtle measures you can take. Even the basic measures are important indicators of whether your reputation is at stake or not.
Looking for the Source
Risk management focuses on handling uncertainty, with awareness being the root of the problem that helps organizations manage events and anticipate problems.
Some software offer enterprise risk management (ERM) solutions, which enable companies to monitor, assess, and report potential risks. These contain pre-installed, industry-specific libraries of risks and sources. These can also feed information into the client’s knowledgebase, which could impact a business’ reputation.
Maintaining the Ethics
Integrity and ethics are at the top of the scale when it comes to reputational risks. Questionable business practices never sit well with customers and often result in low rankings. The perception also applies to companies in the financial sector.
Communication and training around policies are important in maintaining standards, which impact reputations directly.