Defining and managing reputation risk

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Appendix 1: Reputational risk management framework Airmic has prepared the matrix below, which maps the seven dimensions of reputation proposed by Reputation Institute and considers how these can be affected by a specific risk event. For each risk event, Airmic considers how the event is likely to impact the organisation and those stakeholders whose perception is likely to be affected. The list of risk events is not exhaustive, and Airmic members can create their own tables for those events that are most likely to affect their organisation and their stakeholders. Finally, the matrix highlights where insurance coverage for the incident itself is available. Where insurance coverage for the event is available and can be purchased by the insurance / risk manager, Airmic members will be in a better position to engage with senior management and business units on the need for through and effective reputational risk management. The insurance market for pure reputational risk is beginning to develop, and Airmic members may wish to explore policy extensions for reputational impact for the covers detailed below. This can include a consequential drop in revenue as a result of a drop in reputation, and post-incident crisis management costs. Reputational dimension Products / Services Expectation The organisation’s products are high in quality, value and service, and meet the customers’ needs Potential risk events Product recall event Innovation The organisation is innovative and adaptive Failure to update technology platforms, e.g. on-line sales platforms Workplace The organisation maintains good workplaces, treating and rewarding the employees fairly Health and safety compliance breach Governance The organisation is ethical, fair and transparent Breach of regulatory / statutory compliance Citizenship The organisation is environmentally friendly, a supporter of good causes and a positive contributor to society Environmental breach Leadership The organisation’s leaders are excellent and visionary managers, and strong endorsers of their companies Management behaviour, including fraud and mismanagement Performance The organisation has strong overall financial performance, profitability and growth prospects Profit warning announcement 28 Airmic Technical
Impact Key stakeholders Is insurance for the event available? • Recall costs • Litigation and settlement costs • Regulatory / criminal fines and penalties • Negative image and brand impairment • Reduced sales • Competitor advantage • Competitor advantage • Reduced sales • Negative image and brand impairment • Customers • Communities • Media • Customers • Employees • Business partners Product liability Product recall No coverage • Litigation and settlement costs • Employee injury • Investigation costs • Regulatory / criminal fines and penalties • Employees • Regulators • Communities • Unions Employers’ liability • Fines and penalties • Litigation and settlement costs • Reduced sales • Litigation and settlement costs • Investigation and remedial costs • Regulatory / criminal fines and penalties • Negative image and brand impairment • Reduced sales • Drop in share price • Fines and penalties • Settlement costs • Investigation costs • Loss of key employees • Reduced sales • Reduced share price • Loss of key employees • Loss of advertising / key contracts • Negative image and brand impairment • Regulators • Investors and financial analysts • Customers • Communities • Regulators • Media / press • Investors and financial analysts • Media / press • Customers • Investors and financial analysts • Regulators • Suppliers and business partners D&O EIL insurance D&O No coverage 29 Reputational Risk Guide 2015
Page 1: Defining and managing reputation ri
Page 4 and 5: Introduction The objective of the g
Page 6 and 7: Reputation Institute defines reputa
Page 8 and 9: Reputation Institute describes a re
Page 10 and 11: Table 1: The seven dimensions drivi
Page 12 and 13: The current reputational risk lands
Page 14 and 15: Section 2: Managing reputational ri
Page 16 and 17: Table 2: The reputation risk manage
Page 18 and 19: Section 3: Reputation Institute - R
Page 20 and 21: % who would recommend to others Agr
Page 22 and 23: Reputation risk case study: Service
Page 24 and 25: Reputation risk management lessons
Page 26 and 27: % who would recommend to others Agr
Page 30 and 31: Appendix 2: Reputational risk dimen
Page 32 and 33: Appendix 3: Reputation risk managem
Page 34 and 35: The link to reputational risk manag
Page 36: 6 Lloyds Avenue London EC3N 3AX Ph.

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