Reputation risk is here to stay
It has been awhile. I was curious to see how mentions of “reputation risk” had changed, if at all, in the global top tier media since the year before. Every year we conduct a Factiva search of the term to track its progress over the years. As you can see, the number of mentions has dramatically increased in the past decade, with over 800 in 2014 alone. It’s really fascinating to me to see how reputation risk continues to surge when it was barely on the horizon in 1990. It wasn’t until 2002 when the term truly emerged and for good reason. That is when we hit the wall with the dot com bust and the demise of WorldCom, Adelphi and Enron.
Reputation risk is a growing concern for corporations. According to the 2014 Deloitte global survey on reputation risk, 87% of executives rate reputation risk as more important than any other strategic risk. In comparison to 2010, reputation risk was only at 26%. Why the dramatic increase in the popularity of the term?
In today’s changing world, reputation is more valuable than ever. Without a doubt, the rise of digital communications has created this preoccupation with losing reputation which can damage customer relations, share price, employee retention and partnerships. Everyone has their favorite example of what happens when a reputation goes bust and no one wants to be that company (think BP). It is true that it is increasingly difficult for companies to control what is being said about them which makes reputation risk even higher on the board and CEO agenda. However, being prepared for the inevitability of risk to reputation is the best solution to calming the nerves.