Gadook

Reputation Management Author: Konrad S.

A shining reputation undeserved is a reputational catastrophe waiting to happen, asserts the author. Reputation risk responsibilities should be entrusted to managers who have broad perspectives and credibility with key constituencies. Controls must be in place and management must support candid assessment of reputation risk. There’s more, and none of it’s easy. But to fail is to invite catastrophe to come on in.

In the world of financial services, reputation is a funny thing. Nobody disputes its importance. Any senior executive will affirm that reputation is key to success. Confidence, we learn early on, is the cornerstone of the banking business, companies frequently cite reputation risk concerns to explain decisions not to pursue business opportunities that otherwise pencil out well. Bank regulators and examiners warn about reputation risk and criticize institutions perceived to be exposing their reputations to undue risk.

Yet while the financial community and its regulators devote enormous resources to defining, measuring, and mitigating their financial risks, they focus far less carefully on reputation. Reputation risk and its management often skate undefined through discussions of risk management at financial institutions. Moreover, while most financial institutions of any size employ a variety of communications professionals, relatively few even attempt to manage reputation risk comprehensively. This article presents some ideas on the nature of reputation risk and describes some high-level strategies for managing it.