Reputation Risk Management & CSR Strategies

Creating and enhancing an organization's reputation functions as an insurance policy against potential risks in an uncertain and fast growing global economy. Reputation is based on trust from all those (stakeholders) involved in an organization. Trust takes years to gain and can be lost in a minute. Trust is like the glue of an organization that will enhance the reputation and thus its overall often intangible value . An organization needs to establish a good reputation in order to have an immune system that protects against potential internal or external invaders or competitors. Furthermore, an organization then will need to keep that good reputation or alternatively it may need to repair a damaged reputation.

Reputation Risk Management therefore focuses both on (A) the internal structures of an organization with an emphasis on risk management practices and benchmarking vis-à-vis investors/shareholders and employees/associates and (B) on the relationship management abilities with other more external important stakeholders such as media, customers, suppliers, government, regulators, partners and community. In a more and more global internationalized socio-economic environment, cross-cultural aspects of reputation and its management cannot be ignored anymore.

What are the main drivers behind a good reputation?

     •   Innovative and high quality products & services,
     •   A sound long term return on the investment and financial soundness,
     •   An effective use of the organization's assets,
     •   To have the best talent and skills available within the organization,
     •   To guarantee the customers' satisfaction,
     •   To make sure a top leadership is in place,
     •   To have an appropriate compliance and good governance strategy functioning
         (including some strong risk management procedures), and
     •   To implement a good communication and crisis management.

What are important benefits of a good reputation?

     •   It reduces risk and enhances trust-based relationships,
     •   It improves risk management,
     •   It raises employee creativity and effort,
     •   It builds trust among key constituencies,
     •   It provides entry barriers for others, i.e. it deters potential competition,
     •   It attracts the best talented employees and associates,
     •   It cuts complaint, monitoring and compliance costs,
     •   It stimulates knowledge sharing,
     •   It creates loyal customers,
     •   It generates opportunities for creating partnerships,
     •   It attracts sound investments,
     •   It usually can afford and attract the best leadership,
     •   It strengthens relationships with regulators, government officials and
         community at large,
     •   Ultimately, a strengthened competitive advantage often translates in higher profits and
         superb stock prices.

How to enhance an organization's reputation and subsequently the overall value of an organization? The advisor will focus on the potential gap between high but not necessary fulfilled expectations on the one hand and the experienced reality by the different stakeholders (especially customers) on the other hand. The advisor then emphasizes the ability to meet the performance expectations of stakeholders in the form of benchmarking or reality analysis/assessment. Subsequently, the gap between expectation and reality will need to be closed and changing values and beliefs need to be carefully monitored. An overall risk management shall be put in place or adapted to address the overall risks of a failing reputation. Once that gap is managed appropriately by continuous efforts, a healthier and more prepared organization will be able to face the increasing complex challenges of our modern global economy. Socio-economic corporate responsibilities then become a possible competitive advantage. Such an organization will be able to become sustainable and translate such reputation in healthy revenues and profits.

We offer analyses to predict what could happen to the reputation of the corporation and its stock price if they could switch with a peer. The focus is on the reputation for operational performance, management quality, financial performance, stakeholder relationship management and ethical management. After the gap analysis we provide management an idea which aspects of reputation need the most improvement.