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the reputational risk methodology
The reputational risk methodology maps the relationship
between a Company and its strategic business relationships. It gauges
the degree of alignment between corporate objectives, behaviours and delivery,
and external stakeholder expectations and experience. As a result it analyses
the degree of fit, and the corresponding likelihood of the Company being
successful in delivering its business plan - as measured by its reputational
profile.
The methodology is based on the knowledge that stakeholders
judge companies on how they perform in the areas which most affect their
interests. A stakeholder’s impression in one area, however, carries
through to a perception of how well a Company manages its whole range
of business objectives. Of particular importance is the way in which certain
stakeholders - especially the media and NGOs - can shape public attitudes,
and the effect this has on market sentiment. In developing a map of the
Company’s reputational universe, the model analyses the interrelationship
between stakeholders, as well as the relationship between stakeholders
and the Company. The aim of the methodology is to provide the management
team with the capability to measure, analyse, manage and track changes
in the reputational profile of the Company.
The key innovation offered by this approach is two-fold
- the charting of the reputational profile of the Company and quantification
of the associated reputational risk. The outputs may be used in risk registers
and strategy documents, and for target setting. In addition, as a lead
indicator for identifying problems in delivering the business plan, and
as a link to the intangible value of a Company - and to actual and target
share price - the output may be used in other high-level management information
systems to drive performance.
There are four main stages to the methodology, and these are agreed with the project sponsor at the outset: