Federal Budgetary Educational Institution of Higher Education
Financial University under the Government of the Russian Federation
Department of Corporate Finance and Corporate Governance
Discipline “Corporate Finance”
Essay on topic
“Should company think about reputation risk?”
Performed by
Student of the faculty
of International economic relationship
Group IFF18-2
Tsitskieva E.U.
Academic supervisor
Candidate of Economic Sciences,
Senior Lector of Department of
Corporate Finance and Corporate Governance, Khrustova L.E.
Moscow 2021
Should company think about reputation risk? I am firmly convinced that it is
an obligated measure for each CEO who wants the company to grow.
Nowadays the problem of damaging the company’s reputation, corporate and
social injustice has become a serious issue, which might lead to difficulties in a
process of running a business. Clearly, it becomes more and more important for
clients and customers to look for the Impact of a company on society. Overall, it is
obvious now how critical is reputation to company’s viability.
It is also important to notice that such intangible elements as goodwill,
reputation, trust are just as difficult to manage as tangible, physical mechanisms.
Undoubtedly, companies should understand the ways they need to manage this type
of risk and which strategies to use. In fact, even the growing influence of social
media platforms has affected the importance of reputation of a company.
I would like to cite Uber’s case as an excellent example of reputation risk
practice. Company’s policy that decided not to report about attempts of sexual
attacks or other crimes to the police damaged it’d reputation a lot and at the end
this decision costed a lot of money. Same goes for Volkswagen’s emissions
scandal.
However, changes in the way CEOs see the problem of reputation risk seem
to be pretty slow. Firstly, traditionally structured companies are not designed to be
able to ,an age these new types of risk. Secondly, companies should create a system
which will allow to prevent reputation rick in early stages.
In addition, traditionally, risk is dealt with by risk experts, while reputation
tends to be managed by the corporate affairs or communications teams. When those
two teams work in silos, lacking any meaningful collaboration, risks can rise up
undetected.
Moreover, it is impossible to deny that the more open, diverse and
transparent a company is – the more profitable are the results of its activity.
In conclusion I would like to say that I sincerely hope that in the near future
companies will be more conscious and careful about the problem of reputation risk.
Therefore, I truly believe, that understanding and managing reputation risk is all
part of societal change.
References
1. Aldorisio J. Importance of reputational risk monitoring & management,
2020
[Electronic
resource]
//
URL:
https://securityscorecard.com/blog/reputational-risk-monitoringmanagement
2. Bentley D. Reputational risk – how to plan and respond to crisis, 2017
[Electronic
resource]
//
URL:
https://www.ibanet.org/Article/NewDetail.aspx?ArticleUid=34EEC71290A3-4D09-9A4F-2EF9E1EE4A94
3. Butt J. Reputational risk a bigger concern for businesses than regulatory
fines,
2020
[Electronic
resource]
//
URL:
https://myosh.com/blog/2020/08/26/reputational-risk-a-bigger-concern-forbusinesses-than-regulatory-fines/
4. Jermyn R.D. Getting serious about reputational risk is a must for financial
services
firms,
2021
[Electronic
resource]
//
URL:
https://www.lexology.com/library/detail.aspx?g=550c9390-8720-49c5b979-8e659d633e37
5. Perry M. Why you must take reputational risk seriously? 2019 [Electronic
resource]
//
URL:
https://www.raconteur.net/business-
strategy/risk/reputational-risk/
6. Schlarman S. What's really at risk with reputation risk, 2017 [Electronic
resource] // URL: https://www.rsa.com/en-us/blog/2017-04/whats-really-atrisk-with-reputation-risk
7. Tennant F. Managing reputational risk in unprecedented times, 2020
[Electronic
resource]
//
https://www.financierworldwide.com/managing-reputational-risk-inunprecedented-times#.YGMmNK8zaUk
URL: