reputationsrisk

Reputationsrisk, or reputational risk, is the potential for negative consequences arising from damage to an organization's reputation. It encompasses perceived or real declines in trust, credibility, or public image that can affect customers, investors, employees, regulators, partners, and communities.

Causes include product or service failures, data breaches, safety incidents, unethical conduct by leaders, regulatory sanctions, misleading communications, and disruptions spread through traditional media or social media. External events such as economic downturns or industry scandals can also contribute.

Measurement is challenging because reputation is intangible. Common indicators include brand value, customer churn, market share, survey-based trust metrics, media sentiment, social-media engagement, and financial effects such as stock price or cost of capital. Leading indicators may include escalation of complaints, negative coverage, or loss of key customers.

Management approaches focus on governance, culture, and communications. This includes clear risk ownership, risk registers for reputational threats, crisis management plans, stakeholder engagement, ethical training, and transparent reporting. Proactive actions like quality improvement, data protection, responsible marketing, and timely, consistent communications during incidents help mitigate impact. Frameworks such as ISO 31000 and enterprise risk management guidance provide structure; scenario planning and stress testing help anticipate potential reputational shocks.

Reputational risk is interconnected with other risks (operational, compliance, financial). Its impact can be long lasting, sometimes persisting after the initial event. Effective management emphasizes prevention, rapid response, and rebuilding trust through accountability and demonstrable improvement.