Airmic has released a step-by-step guide to managing reputational risk. The report, produced in partnership with the Reputation Institute, sets out a structured approach to understanding and mitigating the risk. It argues that reputation is an intangible risk grounded in emotion, but that by breaking down your reputation into measurable components, you can ‘make the intangible tangible’.
‘Defining and managing reputation risk: a framework for risk managers’ provides a framework for businesses to consider the extent to which an event could reduce people’s trust in seven core areas of business: products / services, innovation, workplace, governance, citizenship, leadership and financial performance.
John Hurrell, chief executive of Airmic, commented: “A company’s reputation is in many ways the most important risk to tackle because it underpins a company’s entire business model – and thereby its licence to operate. At the moment there is not enough understanding of the risk among businesses, risk managers or insurers. Our report aims to remedy this. It represents both a challenge and opportunity for the insurance market.”
Kasper Ulf Nielsen, executive partner at Reputation Institute, who worked closely on the report, stressed the importance of looking at potential risk events through a reputational lens, arguing that the most successful companies constantly monitor how all stakeholders, from customers to financial analysts, perceive the company. “By understanding this perception, organizations can identify the potential reputation risks before they happen and mitigate them before they turn into full blown reputation crises,” he said.
