Are businesses reputation risk ready?

Corporate reputations are slow to make but quickly broken. In our social media age, the range of risk factors and the speed at which they can evolve has increased.

Where once it might have taken a serious product failure or financial fraud to dent an organization’s good name, today the same damage can be done by a misjudged tweet.

An incident can appear to come out of nowhere and spread quickly.

• So how do you predict, quantify and prepare for a reputation event?
• And how do you limit the damage to your brand and revenues if a crisis occurs?

We asked 500 global senior executives, from a range of sectors, and across the globe, about their approach.

Survey sample and methodology

Our survey was carried out by our research partner, Coleman Parkes, in November 2021 using phone-to-web methodology.

We received 500 responses from senior executives responsible for risk strategy across their organization. Respondents were based in 20 countries across Europe, North and South America, Asia Pacific and Africa.

Key findings

89% rated their organization’s resilience to reputation and environmental, social and governance (ESG) issues as good (66%) or very good (23%).

9 in 10 (90%) said they have a formal team in place that responds to significant adverse public events, while 93% run annual exercises to test their ability to manage a crisis.

Organizations are preparing for the financial impact…

Encouragingly, 74% of senior executives are aware of the potential cost of a reputational event; 86% have reserved budget to cover the costs and 84% have a contingency budget for marketing and communications.

…but they may not fully understand the nature of those risks

Most organizations (82%) said they had only carried out a moderate amount of assessment to understand their reputation and ESG risks, while 40% think that their teams have only a slight or moderate understanding of the length, depth and lifecycle of a potential reputational crisis.

While 74% see social as an important marketing channel, less than a third (32%) thought crisis communication was an important use for social media; 89% of respondents said their C-suite communicated on social media once a month or less.

Around 75% of companies do not hold their board members accountable for reputational and ESG risks by linking responsibility to board level key performance indicators (KPIs).

This could send a bad message to staff at lower levels that there is a lack of commitment from the top.

Reputation risks of most concern for companies

…but may not have an accurate picture of the true cost

87% of respondents said their modelling of risk only covers immediate first and third party risks and not the impact of a severe and prolonged crisis.

Reputational risks are wide ranging and among the most difficult for organizations to assess and quantify.

Organizations are taking the right steps but there is still some way to go to achieve the highest level of maturity in mitigating and managing these risks. To learn, more download our survey report by completing the short form at the top of this page.