The Rise and Rise of Reputational Risk

In recent studies undertaken across all manner of industry sectors, a common theme has emerged. Reputational risk is now one of the top five risks in four out of five organisations.

The power of brand is everything. Brand creates perception and as the old saying goes, perception is reality. Whether it is a major corporate working to secure existing market share and chasing tomorrow's, or a government agency navigating the vaguaries of political angst and public opinion - reputational risk has moved from a 'best effort' category, to being recognised as a formal risk category with highly scientific and measured controls.

Datasouth Corporate Services contends that a well executed ERM strategy will address many reputational risks by default, but the growing science in this area in irrefutable. For example, readers may be interested to learn that many well known corporate scandals, have an interesting common ground in their pursuit of the recovery of "hearts and minds" - a gentlemen by the name of Peter Sandman. A renowned US crisis expert, Mr Sandman has popped up most recently during the Cole Royal Commission into the well documented dealings of AWB in Australia and has been well known for his work with other troubled companies around the world.

Despite this being a rather extreme example, reputational risk is well and truly on the agenda. Of course many pre-existing operational controls and treatments will link directly to this area, but one suspects that the word "reputation" will now forever be a part of risk register reporting . . .