Reputation risks are those that can have a material impact on the operations and financial position of an organisation as a result of a loss or break down in, confidence, trust, integrity, ethics, governance, controls, conduct, non-compliance, failure to act and association.
This risk arises from negative or adverse publicity triggered by certain operational events and HR/People actions e.g. employee behaviour, labour disruption, poor quality of products or service delivery, poor handling of complaints.
The impact of a negative reputation can harm the level of operational and business activity and ultimately result in financial loss. This can be significant and have a material impact on an organisation’s balance sheet.
Reputation risk issues can have a major impact on the operations and financial performance of an organisation. These impacts can be immediate and significant or happen over a period of time but will have a lasting effect on the organisation.
Reputation risk management starts with a review of the level of governance in the organisation, its code of conduct, ethics and values, the robustness of procedures and controls throughout the organisation.
The management of reputation risk will ensure that the organisation is better equipped to deal with reputational incidents or situations in a structured and managed way.