Reputational risk: A risk management
framework
Kasper Nielsen
Executive Partner, Reputation Institute
John Ludlow
Deputy Chair, Airmic
Tom Hoad
REPUTATION MANAGEMENT
REPUTATION RISK
MANAGEMENT
A Reputation Risk Management Framework
Airmic Conference
• Reputation Risk is a top
concern…
• But only 1/3 of Airmic
members are actively
managing it…
WHY?
No clear method for
measuring reputation risk
Lack of knowledge about
the impact or reputation
risks
No clear framework to
develop reputation risk
management process
1. The Challenge with Reputation Risk
2. The Reputation Risk Framework
3. How to measure Reputation Risk
4. How to manage Reputation Risk
5. How to Insure against Reputation Risk
6. Taking the next step in your Reputation Risk Management
1. Impact
2. Readiness
3. Monitoring
The process that tracks
progress
towards
managing
and
mitigating
reputation risk
over time
The factor that describes
how
severe the event will impact
the reputation.
The factor that
defines how
ready
the company is
to
identify and manage
a
negative event
Reputation Risk Management
For them to support you they need to trust you.
Trust you as a company that will
deliver on its promises. A company who has a
good reputation
Your success as a company relies on
people supporting you…
• Buying your products…
• License to operate…
• Investing in you…
• Reporting on your point of view…
If you deliver on these 7 dimensions you will be in a situation where each stakeholder will be willing to
support you.
If you Do Not deliver you will lose support
For your stakeholder to trust you, you need to
deliver on their expectations
…
They expect you to deliver on 7 dimensions:
1. Products / Services 2. Innovation 3. Workplace 4. Governance 5. Citizenship 6. Leadership 7. Financial Performance
“A reputation risk is a negative event that will impact
stakeholders’ perception of the organisation”
Customers
Financial Community
Regulators
Employees
Drivers of Reputation
What matters most to each stakeholder?
Pick the 3 Dimensions
Customers
Financial Community
Regulators
Employees
Drivers of Reputation
What matters most to each stakeholder?
What is the Reputation Risk of these issues?
Company has Child
Labor in Supply Chain
Determining the Reputation Risk of an Issue
Assess the Reputation Risk of these 3 issues
To what extent will this event REDUCE people’s belief that your organisation…
1. … offers high quality products and services?
2. … is an innovative company?
3. … treats its employees well?
4. … behaves ethically and is open & transparent in its business dealings?
5. … it supports good causes & protects the environment?
6. … is a company with strong leadership and a clear vision?
7. … delivers good financial results?
Company caught in Accounting Malpractice
Company Recall Products due to malfunction
Company has Child Labor in Supply Chain
• How much will this issue reduce people’s belief that we deliver on each of the 7 dimensions?
• Use a 1-7 point scale
• 1 – not at all • 4 – somewhat • 7 – very much
• How much will this issue reduce people’s belief that we deliver on each of the 7 dimensions?
• Use a 1-7 point scale
• 1 – not at all • 4 – somewhat • 7 – very much
Determining the Reputation Risk of an Issue
Company has Child
Labor in Supply Chain
• How much will this issue reduce people’s belief that we deliver on each of the 7 dimensions?
• Use a 1-7 point scale
• 1 – not at all • 4 – somewhat • 7 – very much
Reputation Risk Assessment
Company caught in Accounting Malpractice
Company Recall Products due to malfunction
Company has Child Labor in Supply Chain
Reputation Risk Assessment
Company caught in Accounting Malpractice
Company Recall Products due to malfunction
Company has Child Labor in Supply Chain
Now you have an assessment to manage from
Reputation Risk Management
You have made the Intangible
1. Impact
2. Readiness
3. Monitoring
The process that tracks
progress
towards
managing
and
mitigating
reputation risk
over time
The factor that describes
how
severe the event will impact
the reputation.
The factor that
defines how
ready
the company is
to
identify and manage
a
negative event
Reputation Risk Management
Reputation Risk Readiness
• At the top! – Your Board is worried about reputation
• To achieve reputation resilience build capability
• Reputation Risk Management • Reputation Crisis Management
• Build a coalition of change
• Risk Management
• Enterprise Risk Management • Crisis Management
• Insurance • Strategy
• Corporate Brand
• Corporate Communications
• Key stakeholder relationship owners
Develop a vision of integrated capability
• Align internal (economic) stakeholder measurement programmes
• Employees (HR)
• Customers (Marketing)
• Suppliers/Partners (Procurement)
• Align with media monitoring
(Corporate Communication) • Emerging Issues• Trends
• Effectiveness of Corporate Communication
• Align with Enterprise Risk Management cycle
• Major Risk Review and Senior Leaderships Risk Registers
• Align with Strategic Planning cycle
• Integrate actions and projects into Capital and Revenue budgets
• Prepare crisis management plans and scenario test them with leadership
IHG – Example
Reputation Risk Measurement Tool Reputation Risk Measurement Mitigate Risks
Reputation Insurance
• Prevent risk from arising with risk engineering
• Funding of response costs associated with crisis management
• Review existing liability policies for coverage
• Consider policies to cover additional costs of crisis such as crisis
communication and other specialist consultants
• Funding of recovery works associated with strategic impacts
such as loss of revenue, market share or reputation ratings
Reputation Insurance
How can this help your business?
Thomas Hoad
