Reputations’ risk of risks, the holiday retail season!

Michael D. Moberly    November 28, 2014    ‘A blog where attention span really matters’!

I suspect the economic fact (business reality) that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, competitiveness, and sustainability lie in or evolve directly from intangible assets may have been, at least, one factor to influence The Economist’s Intelligence Unit (EIU) to produce a ‘global risk briefing’ paper titled Reputation: Risk of Risks.

Obviously, reputation is a highly prized and increasingly acknowledged as a valuable (intangible) asset which, not so coincidentally, a high percentage of respondents to the EIU survey conveyed, i.e., ‘sustaining a positive company reputation is a main concern for risk managers’, exceeding, for example…

  • regulatory risk
  • human capital risk
  • IT network risk
  • market risk, and
  • credit risk.

In the U.S., ‘risk to reputation’ is akin to a fiduciary responsibility that prudently extends beyond conventional risk management, ala Stone v Ritter, 911 A.2d 362 (Del. Supr. 2006).

Unfortunately, there are far too many examples that suggest a holiday retail season will elevate probability that (reputation) risks will materialize because vulnerabilities will be probed, exploited, and manifest as costly and potentially irreversible reminders of reputations’ fragility and the overnight gestation period for risk materialization.

As always, reader comments are encouraged and respected.

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