Like any other potentially damaging business risk, reputational risk must be accounted for and mitigated against.
In a corporate sense, reputational risk is defined as the potential for losses in terms of lost revenue; increased operating, capital or regulatory costs; or the destruction of shareholder value, that are the result of damage to an organisation’s reputation.
Most often, this reputational loss is as a result of an adverse or potentially criminal event involving the company. And since a reputation is decided in the court of public opinion, it can be damaged even if the enterprise is not found guilty of anything in a court of law.
A clear example of the kind of catastrophic brand damage that can lead to the demise of a business is that of global PR company, Bell Pottinger. Following a huge public outcry over the strategy adopted by the company in its work for clients in South Africa, it has seen its CEO resign, clients jump ship and has even been expelled from the Public Relations and Communications Association (PRCA) in the UK.
Similarly, a number of large South African companies have experienced significant negative reputational fallout that is also associated with this scandal.
“Reputation is a performance indicator, and therefore, it is a serious risk condition for any large enterprise. However, due to the amorphous nature of reputation, many might think it impossible to mitigate against the possibility of reputational damage, but the truth is it – like any other risk – can be managed,” says Alex Roberts, Regional Director for Sales and Operations at CURA Software.
“Creating a holistic overview of potential risks, including a detailed evaluation of the company’s current view of its strategies, risks and vulnerabilities, will help a business determine where it stands in this regard. Then, with a risk framework in place, it becomes much easier to analyse gaps in enterprise-level controls, conceptualise an ideal state and implement a roadmap to reduce reputation risk.”
CURA Software’s Enterprise Risk Management (ERM) solutions are designed to enable businesses to better manage risks of all kinds, including reputational risk, while also enabling them to take advantage of opportunities relating to business objectives and goals.
CURA provides a powerful and flexible framework for managing risk, allowing companies to identify, analyse, evaluate and treat both risks and opportunities in order to protect the corporate brand, while at the same time creating value for shareholders, owners, employees, customers and regulators.
“Our customers are able to use CURA’s ERM solution to embed and integrate risk management into their business processes, as well as communicate risk and risk treatment widely. It can also link risk management directly to decision-making, monitor organisational and individual performance against goals and objectives and create a risk-aware culture through enforcement and accountability.”
“Risks can come in many forms, but in the modern business landscape where brands now face attack from multiple angles, it pays to have a well-considered strategy for risk management to preserve the value of your brand. ERM software should form a key part of enabling such a strategy. Remember, it can take years to build a reputation and mere minutes to destroy it, so ensuring you have an effective reputational risk management strategy in place is more important than ever,” concludes Roberts.