What are “reputation risks”?
Reputation risks are any potentially harmful effects a company’s actions, behaviors, or relationships may have on its reputation. The risks come from various sources, including negative media coverage, customer complaints, and unethical business practices.
What type of impact do reputation risks have on a company?
Reputation risks have the ability to make quite a significant impact on a company. They affect the company’s ability to attract and retain customers, investors, and employees.
How do reputational risks occur?
Reputational risks occur in a number of ways; there are direct risks that occur as the result of the company’s actions, indirect risks that occur as the result of an employee’s actions, and tangential risks that occur through other parties, such as joint venture parties or suppliers. With so many avenues for reputational risk, companies must be socially responsible and environmentally conscious.
Are reputational risks foreseeable?
These risks are hidden threats that can come from multiple pathways. The hidden nature of these risks means that they can erupt from nowhere without warning. This is a huge issue because they legitimately threaten the survival of even the biggest and best-run companies.
What is adverse media and how does it pertain to reputational risks?
Adverse media is negative information about a person or company that is being reported in the media. This media typically spreads across multiple channels, from traditional media to social media and other types of unstructured forums and outlets.
What types of adverse media are there?
The negative information from adverse media can involve a variety of things, such as financial fraud, criminal activity, and other types of misconduct. It can also include information about individuals who are on sanctions watch lists.
How can a company identify potential reputational risks?
Learning to identify possible reputational risks is essential in order to maintain a positive perception and reputation. Some ways a company can do that is by vetting any potential business partners for adverse media, money laundering, financial fraud, drug trafficking, human trafficking, financial threats, organized crime, terrorism, and other concerns. Beginning a partnership with an individual or company that has been involved in any of these activities poses a serious threat to its reputation and can even have legal ramifications.