New ways to detect emerging reputation (and other strategic) risks
What are they saying?
Reputation risk often tops the list of those that keep senior executives and board members up at night. That concern is not misplaced. Reputation risk emanates from financial, operating, security, compliance, legal, and other risk events, and when those events come to light, that light can be harsh.
This is particularly the case in the social media and virtual worlds, where incidents and decisions that would escape notice or comment a mere five years ago, now find a global audience ready to take organizations to task within hours and often with serious repercussions.
Not incidentally, reputation risk usually falls outside traditional risk management frameworks and Enterprise Risk Management (ERM) capabilities. Yet reputation risk must be proactively managed as a risk given its ability to damage brands, lines of business, and entire organizations. Indeed, this elevates reputation risk to the level of strategic risks, which means it warrants senior executive and board-level attention.
As with most risks, the sooner reputation risk is recognized and addressed, the better. Yet approaches to managing reputation risk tend to focus mainly on cultivating a good reputation and countering setbacks through effective communication. While essential, these activities are no longer enough, given that reputation risk can emerge so quickly and from so many directions. Management therefore needs explicit means of recognizing the potential reputational impact of an incident or decision and of proactively addressing reputation risk.
The right capabilities, enabled by innovative technologies, can position the organization to identify, detect, track, mitigate, and manage reputation risk—and other strategic risks—more proactively than traditional capabilities and reactive communication. Indeed, many companies are seeking better methods of addressing reputation risk, and working to apply them.
Inside Magazine - Global edition 2016
Inside is Deloitte’s quarterly magazine offering an exclusive insight into best practices, trends and opportunities faced by our clients across all industries.
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