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REPUTATION RISK

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by

TSAH ELIAHOO

on 26 January 2014

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Transcript of REPUTATION RISK

The risk of risks
REPUTATION RISK
WHAT IS
REPUTATION
REPUTATION RISK
REPUTATION RISK
MANAGEMENT
Develop and Implement an Explicit Process

The right person is NOT the CEO
The CEO is responsible for creating value and thinking about the upside
Day-to-day analysis of downside reputational risks would be time-consuming and paralyzing
CEO is also a key source of reputational risk
However, the CEO does have major responsibility when a crisis occurs and reputation is damaged

The key elements of the process are information sharing and integrated analysis
Across all functions and business units
Using quantitative and qualitative data of many types
Using a wide-range of analytical techniques

The process should build on existing processes to avoid unnecessary bureaucracy


Corporate Communications can manage this process if it is willing to take on the challenge
Basis: 23.220 Passagen, 05/2006, TV-Nachrichten bis 23.05.2006
Identify Changing Beliefs and Expectations

Internal interviews of senior management and functional experts who are “in touch” with the outside world
Corporate communications
Marketing
Investor relations

Interviews with a wide range of industry and topical experts
Create as broad a network of experts as possible
Continually look for new and fresh views


Third-party soundings of NGOs
They cannot be ignored
They can provide insights about emerging issues in the NGO world and relevant new NGOs

Again, much of this analysis already being done but needs to be integrated from a reputational risk perspective
Basis: 23.220 Passagen, 05/2006, TV-Nachrichten bis 23.05.2006
Identify Changing Beliefs and Expectations

Since this is about the future it is not an easy thing to do

But insights can be gained by accessing multiple data sources using a variety of research methodologies


Surveys of relevant stakeholders
Customers
Employees
Investors


Strategic media analysis
Agenda Setting
Agenda Cutting
Advanced search analytics on narrative data
Basis: 23.220 Passagen, 05/2006, TV-Nachrichten bis 23.05.2006
Objectively Assess Both Reality and Reputation

When Reality>Reputation need to improve communications

Media relations strategy
Greater transparency and enhanced business reporting
Shareholders
Other stakeholders

When Reputation>Reality need to improve capabilities

Much of this analysis already being done as “performance management” but needs to be integrated from a reputational risk perspective
“It takes many good deeds to build a good reputation,
and only one bad to lose it.“

Benjamin Franklin
Reputation Risk is the Greatest Risk of All
The Importance of Reputation
Develop and Implement an Explicit Process

Appoint ONE person to be in charge of developing and managing the process for managing reputational risk

This is NOT a full time role and should be held by someone with another job

Who the right person is depends on a company’s particular situation based on industry, strategy, and organization
Most common choices include
COO
CFO
Chief compliance officer
Head of risk management
Head of internal audit
General counsel
Other viable candidates are
Head of marketing
Head of strategic planning
Head of corporate communications
Basis: 23.220 Passagen, 05/2006, TV-Nachrichten bis 23.05.2006
Reputation is:
What is perceived by others
Shareholders
Customers
Employees
Regulators
N.G.O's
Reputation comprised of:
Product quality
Corporate governance
Customer service
Intellectual capital
Employee relations
Financial performance
Environmental awareness
Reputation
MARKET
VALUE
Performance
Better employees
Loyal customers
Vendors
Future
expectations
LOWER
PERCEIVED
RISK
TRUST
WHY IS IT SO IMPORTANT ???
Reputation risk - current state:
No consensus about definition:
Is it a risk in its own or poor management of other risks?
Lack of tools and techniques
Lack of clarity about who is responsible
REALITY
GAP
CHANGING
BELIEVES
AND
EXPECTATIONS
INTERNAL
COORDINATION
MEASURING
REPUTATION
CASE STUDIES
`
THANK YOU
Full transcript