Risk Management
Shielding Your Brand : The Art Of Reputational Risk Management
By Reuben Kisigwa
“ Character is like a tree and reputation like its shadow . The shadow is what we think of it ; the tree is the real thing .” - Abraham Lincoln .
All businesses should think reputation . Reputation , or the views , opinions , and status that various stakeholder groups have of an organization , is one of the most valuable intangibles for businesses .
In the business world , reputation and brand image are closely related concepts . It is crucial to remember that an organisation ’ s reputation and brand image work together to shape stakeholders ' perceptions of the business and its overall credibility . An organisation ’ s reputation reflects how it is actually perceived by stakeholders , while its brand image represents how it wants to be perceived .
The importance of having a good reputation cannot be overstated . A company is only as good as its reputation and executives should be aware of the significance of this .
Reputation management , or continuously surpassing stakeholders ' expectations , is a competitive advantage that adds value to the company or brand .
A company with a good reputation can attract and retain talent , make operations and partnerships with other companies and entities easier , and increase customer loyalty . Companies with good reputations are valued more highly by the market and have lower cost of capital due to the belief that they will generate consistent profits and future growth . All organizations , regardless of size or industry , must not only establish but also uphold a positive reputation because an improperly managed reputational risk may even compromise the ongoing operations of the business .
Building a solid reputation takes time and effort ; it can take months or even years to establish . However , a company ' s reputation can also be destroyed in an instant , and it takes time to rebuild .
Significance Of Reputational Risk
A company ' s reputation can have a direct impact on its overall success , which is why it is crucial to comprehend reputational risk . Customer preference may decline for a company if a negative event damages the company ' s reputation among the general public . A company ' s stability may be impacted by revenue loss as a result of this . Reputation also affects both hiring and attrition , and as is well known , a successful business depends on attracting and retaining qualified human capital .
Your ability to prevent , identify , and minimize reputation risks can help you build strategies that promote the expansion and success of your company . Both profit and non-profit organizations need to have a good reputation because in the end , a poorly managed reputation prevents the business from fulfilling its objectives and mission .
Reputational Risk Factors
Reputational risk factors can be categorised under these four areas :
Many organizations perform poorly in protecting their reputation . They usually concentrate their efforts on dealing with the reputational risks that have already come to light . This is crisis management , not risk management ; it ' s a reactive strategy merely meant to contain the damage .
Reputational risk brought on by the business ;
for instance , subpar deliverables and a failing business plan . Reputational risks can also arise from an inadequate business model . A company ' s reputation may suffer as a result of financial setbacks and issues with customer service . Some enterprises and companies also carry an inherent reputational risk as a result of the products they sell , especially if those products have the potential to cause controversy due to
80 MAL59 / 24 ISSUE