From managing reputation to managing reputation risk
Maintaining consumer trust is critical for retailers in the most customer-facing of all business sectors. But it’s getting harder to achieve in a time of rapid change in technology, consumer behavior and public opinion.
This shifting landscape can make it more difficult to reach and understand consumers and to know where a threat to reputation might come from. Anything from a customer complaint to a misjudged tweet can blow up quickly on social media. Even previously accepted positions on issues such as diversity can rebound on a company’s image as these become contested arenas.
In our third Reputation Risk Readiness Survey, we asked 100 senior executives from leading retail companies around the world, how they are adjusting. What do they see as the main risks to their reputation? How ready are they to deal with the fallout from a reputational crisis.
And how would they cope with the financial impact?
Our findings suggest that, while retail businesses face a growing and complex range of reputational threats, they are making good progress in addressing them.
More retail firms are putting in place robust systems to assess and manage risks, understand the impacts and integrate reputation into risk management processes.
The results confirm a trend we identified in 2023, of greater finance and corporate involvement in reputation management, reflecting a shift in focus among leading retail businesses from managing reputation as a function of branding to managing reputation as a risk.
Cyber-attack is no. 1 reputational risk
67% of retail firms in our survey put the potential fallout from a cyber-attack among their top risks to reputation, up from just 20% in 2023, as threats from bad actors increase.
Environmental concerns are growing
65% of retail firms named environmental issues among their top reputational concerns, while 48% cited governance, as ESG becomes embedded in law in many countries.
There’s less focus on physical risks
Only 26% named sale of harmful products as a top reputational risk, down from 57% in 2023, while 13%cited animal abuse, down from 35%, and 27% bodily injury down from 39%.
Firms manage reputation as a risk
92% said they have a formal process in place for assessing and managing reputational risks, with 40% saying this is linked to board key performance indicators (KPIs),up from 20% in 2023.
Financial impact modelling is low
20% they had a great deal of modeling capability to understand the costs and liabilities associated with reputational damage.
In retail, customer trust is crucial, and losing it can harm a brand's reputation, revenues, and balance sheet. As technology advances and the world becomes more polarized, retailers face increasing reputation risks.
Willis offers a comprehensive reputation risk management solution to support clients. This includes Polecat risk monitoring, risk quantification, crisis communications expertise to manage media during and after events, and reputational crisis insurance to cover any loss of gross profit resulting from a crisis.
To learn more, download your free survey report by completing the short form at the top of this page.
