Reputation-linked losses for companies have continued to increase over the last decade.
“Insight into reputational risks can substantially improve how companies are able to quantify intangible value.”
Garret Gaughan
Head of Global Markets P&C Hub,
Willis Towers Watson
The ‘mis-’ and the ‘dis-’increasingly attached to information mean that managing reputational risk is no longer a nuisance when things go wrong, but a very real threat that can impact a company.
Insight into reputational risks can substantially improve how companies are able to quantify intangible value. But leaders see a challenge in obtaining and formalising a way to access reliable insight.
Companies that invest in scanning for reputational risks have honed their capability to anticipate negative publicity through accumulated experience. Some have begun to develop an ability to sense crucial tipping points and swerve away from crises.
Risk professionals shield their company from damage caused by a range of threats posed by a variety of triggers. A single event can dismantle a company’s solid reputation.
There are also incidents where the reputation of an entire industry can be threatened. The Rana Plaza collapse in 2013* negatively impacted the reputation of an entire industry.
This highlighted the need for reforms to working conditions and prompted new customer demands.
Whether risks are posed by external threats or result from company wrongdoing, some risks can have a long-lasting detrimental impact beyond their own lifecycle.
“The respondents were drawn from a wide range of industries and geographies representing some of the largest companies in the world.”
Garret Gaughan
Head of Global Markets P&C Hub, Willis Towers Watson
To find out more about how organizations are managing their reputational risk, we asked 200 risk managers and executives about how their organization handles reputational risk and the tools and services they use.
The respondents were drawn from a wide range of industries and geographies representing some of the largest companies in the world.
Our survey results paint a picture of an area of risk management where the challenges are well understood and the threat accepted, but where the solutions available to risk managers are lacking.
It’s often the case that major changes within a business are restricted by a lack of C-suite buy-in.
However, our research showed that 75.5% of the risk managers we spoke to felt that their C-suite was either somewhat or very committed or invested to managing reputational risk.
Even with this level of support from senior managers, reputational risk can’t be managed effectively without the necessary tools and financing.
Changes to how people consume media, form opinions and perceive companies will contribute to how much focus is given to reputational risk.
Q – In the next 5 years, do you think there will be more focus, less focus, or about the same amount of focus on reputation risk, compared to today?
79.5% of the risk managers we spoke to felt that in the next five years, there would be more focus on reputation risk, compared to today.
Loss of income and reduced customer base are perceived as the main issues that businesses face following reputational damage.
However, the impact of reputational damage can be felt across a business, from issues with recruitment and retention, lower environmental, social and governance (ESG) score, reduced lobby support and increased industry regulation.
Q - Which of the following are serious issues and negative business outcomes that your organization could face as a result of reputation damage? (select all that apply)
61.5% of risk managers we spoke to said a loss of talent, due to both retention and turnover, would be a major issue their organization could face as a result of reputation damage.
In addition, 56.5% said being a less attractive employer would be a serious negative outcome.
Reputational damage can have an impact on the talent available to a business.
Employees are now taking more consideration when choosing an employer to ensure the ethics and values of the organization align with their own.
There is a dissonance between the data-driven management of other business risks and reputation.
Marketing, communications and HR teams are often left to manage reputation risks without the tools or skillset needed.
Our research shows that the lack of reliable data or a clear methodology are the most common challenges to monitoring, measuring and managing reputational risk.
Q- In your role, what challenges do you face related to the monitoring, measuring or management of reputation risk? (select all that apply)
In order to effectively manage their reputation, businesses need tools able to digitally scan the horizon for changing opinions across all stakeholders, in real time.
This will allow them to adapt quickly, ahead of time rather than firefighting after a cultural shift or a negative event.
When asked to describe the reputation intelligence tools that were available within their organizations, 44% of participants said there weren’t any, or they weren’t aware of them.
Our research has shown that many of the current tools, methodologies and insurance products available are struggling to keep up with the changing demands of our digitally enabled world.
In order for businesses to understand and mitigate the risks to their reputation, they need adequate tools that are driven by data and allow them to track and anticipate threats or issues for them, their stakeholders and their industry.
Alongside this, they need tailored insurance products that have been specifically designed to cover the wide-reaching losses reputational damage can cause.
Please download our Global Reputational Risk Management Survey Report to view the full findings from the survey.
To find out more about our new solution or to discuss the survey findings please contact:
*https://www.gov.uk/government/case-studies/the-rana-plaza-disaster
