Reputation Risk

Reputation risk centres on the public and government perception of the reliability, trustworthiness and desirability of partnering with an organisation. These perceptions affect an organisation’s ability to proactively influence policy and regulatory issues and their social license to operate. Generally, reputation risk occurs across the broad areas of integrity and ethics, security risks (cyber breaches of dataset), service risks (related to safety, health and the environment), third-party relationships (relationships with vendors), financial performance and crisis response. It is often not just an issue itself, but the way the issue is communicated (or not) with the public and stakeholders.

Risk indicators include:

• Visibility with Stakeholders
• Engagement History
• Media presence and relationship
• Lack of or inappropriate public position/policy
• Crisis response
• Conduct and liability

Cyber breaches are becoming increasingly common and can have profound impacts on an organisation’s ability to maintain clients and to work with government. Much like many other reputational risks, a single incident, regardless of how well it is handled, can instantly and irreversibly change the operating environment of an organisation. These risks are usually managed through a two-fold approach, firstly in reducing the chance of incidents and secondly in hedging against the impact of incidents occurring by building a strongly positive reputation that can better weather damage.

By understanding the level of specific areas of reputation risk exposure, organisations can target resources to where they are most needed. Depending on the organisation structure or exposure, this could be through increased media and communications resources, through stronger working relationships with government departments or through highlighting and channelling political wins to government representatives.