Reputation Worries All Around

the-one-percentReputation is often high on agendas these days.  Years ago, it was not usually number one but among the top three to five items that kept boards and CEOs up at night. This week someone sent me an issue of Operational Risk and Regulation and I quickly breezed through the table of contents online when I noticed that they had an article describing a risk survey among operational risk managers. This is not usually the typical stakeholder group I get asked about so I took a look at the various types of risks that were keeping them up at night or at least, stressed out during the day. Reputational damage was at the top of their top 10 list for 2013.  When I turned to the fuller description on reputational damage, the first sentence was quite boldly stated. "A good reputation has never been easier to lose -- though this may not be a problem for much of the financial sector, as it doesn't have one." I understand where the author is going with this statement but the financial sector does have a reputation, just not a particularly good one. A company or sector can have a good or bad reputation and in some cases, somewhere in between. Most every sector, person and organization has a reputation. And just as a company can lose reputation over night or in seconds, so can it begin the process of redeeming itself by beginning the process of being straightforward, transparent and communicative. The financial sector, like many others, has certainly been battered but it does not mean that it is not crawling back and trying to restore its credibility. If anything, the financial crisis of the past few years has taught the financial sector to be more humble and that might just be a good place to start.

 

KEY RISKS FOR OPERATIONAL RISK DEPARTMENTS

IN 2013

 

Reputational damage

83.2%

Failure to enforce internal controls

79.8

IT sabotage/cybercrime/cyberattacks

77.4

Complex fraud and abuse of customer data

73.4

Business continuity

66.0

Sanctions and AML compliance

57.2

Culture, incentives and compensation

46.8

Operational risks associated with emerging market operations

 

42.3

Political intervention

35.0

Epidemic/pandemic disease

16.2

Ordnance Survey, in association with Operational Risk & Regulation