Managing Reputational Risk

Michael D. Moberly   October 1, 2009

The ability of management teams to sustain (enhance) the long term (strategic) value of their company’s reputation lies, in part, with the manner in which the firm’s reputational risk management (oversight, monitoring) function is initially conceived, organized, executed, and ultimately comes to meld with existing enterprise risk management (ERM) platforms.

In today’s extraordinarily competitive and intertwined business environment, reputational risk, i.e., stakeholder expectations and perceptions are increasingly global, fragile, and vulnerable to a range of (spontaneous, inadvertent, and/or purposefully malicious) acts – events.

What makes reputational risk management even more necessary today is the hyper-competitive, nanosecond and assymetric information dissemination technology platforms that exacerbate events and/or acts to elevate exposure – vulnerability to reputational risk.  These must be consistently monitored and integrated with highly proactive (reputation risk) identification and assessment processes coupled with a repertoire of effective and targeted responses/reactions that carry a measurable probability of mitigating the adversity.  A company’s reputational risk response repertoire should be articulated in a manner that strengthens, if not enhances, relations with those stakeholders whose (continued) support is essential to the company’s long term – strategic (business) objectives.

Why should reputational risks be addressed and articulated responsibly and rapidly?,  it’s because a company’s reputation affects stakeholders’ in many different ways, e.g., their inclination to be engaged – associated with a particular company through supply relationships, customer relationships, employment relationships, or even decisions to reside in communities where that company has operations.

Again, an effective starting point for conceiving an ERM reputational risk initiative is to ensure its management and oversight function(s) are synchronized (aligned) with (a.) the company’s core business, and (b.) the dominant stakeholders’ perceptions and expectations.  That’s because, those stakeholders continued support is essential to achieving the company’s strategic (financial) objectives.  

Reputational risk management does not have to be an extraordinarily time consuming or resource intensive undertaking.  When management teams and c-suites execute it correctly, it will deliver returns, especially when its conceived in the context of this economic fact – business reality…

65+% of most company’s value, sources of revenue, sustainability, and foundations for future wealth     creation, irrespective of (company) size or industry sector, lie in – are directly linked to intangible assets in which the bulk, most experts agree, is reputation!


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