What are “reputational risks”?
Reputational risks are all potentially damaging effects on reputation, whether through actions, behaviour, or relationships. The risks stem from various sources, including negative media coverage, customer complaints, and unethical or illegal business practices.
What kind of impact do reputational risks have on a company?
Reputational risks can have a significant impact on a company. They influence a company’s attractiveness to business partners, customers, suppliers, investors, and employees.
How do reputational risks arise?
There are direct risks that arise from the actions of the company, indirect risks that arise from the actions of an employee, and tangential risks that arise from other parties, such as joint venture partners or business partners. In addition to complying with the law, companies are expected to act in a socially responsible and environmentally conscious manner.
Are reputational risks foreseeable?
Reputational risks usually come as a surprise and can lead to unforeseeable consequences for a company or organisation.
What is unwanted media, and how does it affect reputational risks?
Adverse media is negative information about a person, company, or organisation that is reported in the media. This media usually spreads through multiple channels, from traditional media to social media and other types of unstructured forums.
What types of harmful media are there?
The negative information from the media can concern a variety of topics, such as financial fraud, criminal activities, and other types of alleged misconduct. It may also contain information about individuals who are on sanctions lists.
How can a company recognise potential reputational risks?
To maintain a positive perception and a good reputation, it is ideal to check for reputational risks. For example, potential business partners can be screened for negative media reports, money laundering risks, financial fraud, drug trafficking, human trafficking, financial threats, organised crime, terrorism, and other sensitive issues. Entering into a partnership or business relationship with a person, company, or organisation that is or has been involved in any of these activities can pose a serious threat to reputation and, in the worst case, may result in legal consequences.