Reputation risk is driven by a wide range of business risks. A good reputation is difficult to build and easy as pie to destroy. The impact of traditional risk is substantial but the impact of a reputation risk can be even more damaging and it can take companies years to rebuild deteriorated reputations. It’s a business imperative to manage the company’s reputation carefully.

With today’s electronic and social media, the news cycle reporting on the downward spiral of a once-proud organization that has suffered severe reputation impairment is not a pleasant one to watch. Unfortunately, such news events capture our attention all too frequently, leaving an indelible impression about a company’s reputation and brand image.

Applied to a business, “reputation” represents an interpretation or perception of an organization’s trustworthiness or integrity. While the truth ultimately prevails over the long term, reputation can be based on false perceptions in the near term. If accurate over time, reputation provides a barometer of how an organization is likely to respond in a given situation. However one defines reputation, everyone agrees it’s a precious enterprise asset and recognizes a reputation that has been damaged beyond repair.

We define “reputation risk” as the current and prospective impact on earnings and enterprise value arising from negative stakeholder opinion. To one author, it is “the loss of the value of a brand or the ability of an organization to persuade.”1Bottom line, reputation is fragile. What takes decades to build can be lost in a matter of days.

This plan is recommended for Large Enterprises as they have multiple folds of objectives which is difficult to summarize in priority as it varies from company to company. Plans are to be customized based on their priority.