Aon’s James Trainor – former FBI Assistant Director of the Cyber Division in Washington DC – explains how cyber risk has become much more than just an operational threat to businesses and can now have a real and lasting impact on a company’s reputation. Reputational risk can be managed and measured using an adapted operational risk framework. reputational risk as the number one strategic risk. Management not doing enough to protect from reputational risk Discuss ways of • The COVID-19 pandemic has exposed the fragility of the global economy and its supply chains. reputational risk Ability to attract top talent 3 4 /visualcapitalist @visualcap visualcapitalist.com Transaction monitoring Low-to-medium High-risk client risk client Total decisioning time 48˛72 hours Total decisioning time 0˛6 hours If they are determined to be a lower-risk client, they will be fast-tracked through the approval process. Reputational risk, often called reputation risk, is the potential loss to financial capital, social capital and/or market share resulting from damage to a firm's reputation. They consider brand reputation as the highest strategic risk area for a company. http://www.theaudiopedia.com What is REPUTATIONAL RISK? Having the right approach in the They must expand the scope of their risk assessments and responses to include a thorough understanding of how a weaponized political environment will impact their decisions on the individual customers and types of business they serve. • When an event had a reputation risk impact, the total losses were on average almost double the announced losses. This vital lesson is working its way around corporate water coolers — both real and virtual — where formerly siloed executives are better understanding the strategic enterprise-wide implications of reputation risks and their management. Reputational risk events can arise as a result of many different causes, often involving an operational risk event. Operational risk; Can reputational risk be measured. Evaluate risk (a)Evaluatethe impact of risk (b) Assess the likelihood of risks (c) Analyse the interaction of different risks • Quantificationofriskexposure • Risk maps A3. David Benyon finds out why, and asks what might be done to resolve this situation 04 Jan 2010 Reputational risk will often come hand in hand with operational risk, but it has yet to be taken as seriously, if it is even considered at all. It has also shown that Loss of a firm’s reputation can result in loss of market capitalisation and/or assets under management due to a reduction in share value or people selling off all or part of their stake. It is no longer sufficient to try to manage reputational risk by controlling what a bank does and how they do it. A reputational crisis can deal a devastating blow to customer confidence. When a reputational risk event occurs there are frequently negative legal, regulatory, key person and stock price impacts. Madrid, April 2015 BARCELONA BOGOTÁ BUENOS AIRES LIMA LISBOA MADRID MÉXICO PANAMÁ QUITO RIO J SÃO PAULO SANTIAGO STO DOMINGO In collabotarion with: 2 LITIGATIONS AND REPUTATIONAL RISK. It is the first study which develops a holistic approach to measure and manage reputation risk to be implemented in banks in practice. expert opinions, interviews with Senior Management, risk inventory, media and social media screening * 0% 10% 20% 30% 40% 50% 60% 70% Stand … This is often measured in lost revenue, increased operating, capital or regulatory costs, or destruction of shareholder value. Business reputation can be damaged by actions that are perceived to be dishonest, disrespectful or incompetent. Reputational risk has traditionally been seen as an outcome of other risks and not necessarily a standalone risk. Reputational risk is the top concern for senior executives, according to a new global survey of more than 300 major companies from Deloitte. Another thing that makes reputational risk difficult is that boards can create reputational risk during the course of making strategic plans without realizing it. Legal risk arises from the potential that unenforceable contracts, lawsuits, or adverse judgments can disrupt or otherwise negatively affect the operations or condition of a banking organization. Of note, the top three reputational risk concerns of 300 respondents to a Deloitte/Forbes Insights survey were issues arising from ethics and integrity such as fraud, bribery and corruption; security risks (both physical and cyber); and product and service risks. Vaccine Muddle Is Reputational Risk for AstraZeneca ... A secondary question is the impact on AstraZeneca as a business. This can happen when your company's character or ethics are called into question. Organisations are having to be more responsive in addressing risks that have a potential reputational impact as the speed of onset of these • The impact varied by risk event type, with fraud-related events having significant reputation risk losses (over 100% of the announced loss), while execution and process errors tended to have only minor reputational impacts. 39 FIGURE 4. Reputational Risk in Healthcare. reputational risk Measuring the impact of legal proceedings on the reputation of companies. * e.g. Reputation risk is any threat to your company's good name. Wayne Imrie 16 October 2019 ... as well as addressing financial impact. It is in a complicated partnership with academia on a global task, not a discrete, wholly-owned project. Key local contributing factors including the increased level of customer activism driven by social media and the greater scrutiny by local and global markets. This view has been gradually changing because it is increasingly clear that reputation is critical to the viability of a company. Some Stats on Reputational Risk. 7 Reputational Risk Examples posted by John Spacey, September 26, 2015 updated on November 07, 2018. The scholarship on reputational risk management in banks is still limited in size. In a recent study by Deloitte and Forbes Insights, 300 executives (C-suite and board directors) were surveyed. Reputational Risk Protecting what – matters most. The assessment of reputational risk is, due to the nature of this type of risk, constantly evolving and dependent on numerous factors at any given point in time and it is therefore not possible either to define all matters and circumstances which may pose reputational risk, or to set out all the considerations which should be applied as part of the decision-making process. Henry Ristuccia, global leader, Governance, Risk and Compliance Services, Deloitte Touche Tohmatsu Limited, discusses why reputational risk requires a fundamentally different approach from traditional risk management practices and steps … Here are some statistics that illustrate my point about reputational risk. The healthcare sector treats and supports patients, their families and wider communities in the most difficult circumstances, which requires a major investment of trust on their part. A 2017 Global Risk Management Survey conducted by AON Risk Solutions polled 1,843 respondents from public and private companies of all sizes, across a wide range of industries, in more than 60 countries. The impact of reputational risk is often huge. Reputational damage and cyber risk go hand in hand Aon report reveals 2019’s biggest cyber threats to business. One revelation? reputational risk to the instruments used for operational risk can be an option to achieve this. And the acceleration and amplification of bad news through social media demands an urgent and coordinated response because reputational damage can be inflicted faster than ever before. With reputational risk (which occurs when a brand loses its value and positive mindshare of the stakeholders which results in a negative opinion that can spread like wild fire) in perspective, compliance can prevent its crystallization and save you a lot of money and effort in damage control of your brand's reputation. A flight to safety may also lead to aspects of market contagion i.e. Reputational risk is the chance of a loss due to damage or a decline in your reputation. The purpose of this document is to elaborate an effective approach of managing reputational risks in banks. What does REPUTATIONAL RISK mean? Reputational risk can be a difficult term to understand because it’s difficult to define. In making business decisions, boards need to factor in the impact of reputational risk. 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