reputational risk

Reputational issues are playing an increasingly important rôle in terms of a company’s brand, its differentiation strategy and its market positioning. Building the reputation of a company is one of the main challenges for a CEO and the senior management team. Reputation has become one of a company’s most important intangible assets.
    Markets constantly evaluate the ability of management to deliver the business plan - underperformance and ‘surprises’ damage both investor confidence and corporate reputation. In parallel, the reporting obligations of the OFR and Sarbanes-Oxley, are placing directors under increasing pressure to account for the rôle their intangible assets play in creating long-term shareholder value.
    The challenge for a management team is to understand how ‘reputational equity’ is built up within the company, how long-term value might be generated by a top class reputation and at what point markets become concerned at a deteriorating situation. What are the building blocks of reputational excellence, and what is the relationship between a deteriorating reputation and share price?
   reputational risk strategy™ have developed the reputational risk methodology as a means of helping a management team get to grips with this problem. The methodology focuses on the ability of the senior management team to execute its strategy, and the reputational factors which underpin, or undermine, the process of delivering the business plan. The methodology enables companies to chart their reputational profile, and track, measure and manage their reputational risk; analyse reputational equity as a source of value creation, through the growth of a company’s intangible assets; use the outputs as a lead indicator of progress in business plan implementation; aid understanding in terms of developing the business model and strengthening investor confidence; provide a high-level indicator for use in management information systems; and address directors’ reporting obligations under the OFR and Sarbanes-Oxley.
   In these pages we introduce the underlying processes used to analyse the reputational profile of a company. For a more detailed understanding of the methodology, how it is applied and the detailed mathematical model which underpins the analysis please contact us.