Reputational Risk. How to manage for value creation
28 Oct 03

‘Reputational risk’ is one of those phrases of the moment. However there is surprisingly little available that sets out what the term means, let alone in a way that relates it to the way people feel and think as well as act. For value to be realised, reputation needs to be seen as much more than the amount of column inches that PR departments and their advisors monitor. At its core, it is about the character of the business and is what key stakeholders expect in terms of corporate behaviour.

The Financial Times Executive Briefing Reputational Risk – How to manage for value creation is the first available in-depth analysis of reputational risk. Drawn from the author’s experience and observations while working in and with FTSE 100 companies and based on pioneering research with companies and investors, it sets out the need for reputation to be recognised and treated as a key intangible asset.

Today, the new ‘rules of the game’ concerning corporate reputation are taking shape. These go well beyond corporate image or identity and are in a very different league to public relations. Corporate governance and company law reforms demand that the duties of directors and company reporting requirements explicitly deal with the imperatives of reputation. The reality however is dangerously different. As a major survey made clear as this Briefing went to press - while 65% of global CEOs say it is their personal responsibility to manage their company’s reputation, only 14% of the corporate executives polled say their company’s board was responsible. And this is the perception almost four years after the requirements of the Turnbull Committee became mandatory, at least for listed UK companies.

Reputational Risk – How to manage for value creation focuses on what is often implied but seldom made explicit: the relationships that underpin reputational risk. This leads to an approach that looks at how trust works, the nature of stakeholder expectations and the strength of business relationships - and then how these connect to corporate value. It also reveals that ignoring the rational and emotional factors affecting investors as well as customers and employees can make a weak position for companies far worse.

The Briefing points the way on how to effectively manage reputational risk. It explains why reputational risk must be aligned with an organisation’s strategic priorities and integrated into its approaches to risk and business management. It also demonstrates how investing in and maintaining reputation as a critical corporate asset can build brand equity and help to deliver shareholder value.

Essential reading for all senior decision-makers who are responsible for business strategy and value creation (as well as those that aspire to advise them), this FT Executive Briefing demonstrates - in clear language and with examples to which they can relate - how value creation will increasingly depend on a thorough understanding of what reputational risk really means.

Reputational Risk – How to manage for value creation published 23 October 2003 by Financial Times Prentice Hall, priced £120. For more information or to purchase click here.

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