Almost nine in 10 (86%) of businesses are concerned about loss of income and a reduced customer base due to reputational risk, a study by Willis Towers Watson has found.
According to the global broking and consulting firm, an organization’s reputation is extremely important, especially in the age of social media. With less stringent checks in place compared to traditional media outlets, organizations are now increasingly concerned about protecting their hard-won reputations.
The study, which involved 200 global organizations, found that seven in ten (72%) respondents report that risk management teams have at least some responsibility for the monitoring, measuring or management of reputational risk.
Eight in ten (80%) of organizations believe that the focus on reputational risk in their business will increase in the next five years. Meanwhile, the majority of respondents highlighted that reputational risks could result in potentially devastating outcomes for their organization. These include loss of income (86%) and weakened human capital, due to of the reduced ability to retain (62%) or attract (57%) talent.
However, 68% of clients surveyed said that they have no framework in place to deal with reputational risk – 51% said that they face challenges in accessing reliable data, while 42% said they lack the tools to do so.
“Loss of income and reduced customer bases are usually the main issues that businesses face following reputational damage,” said Scott Burnett, head of corporate risk & broking, Asia, and head of Asia, Willis Towers Watson.
“However, the impact of reputational damage can be felt across a business, from recruitment and retention of talent to lower environmental, social and governance (ESG) score, investor activism and increased industry litigation. Reputational risk is therefore increasingly of concern to our clients with most risk managers now having some responsibility for risk mitigation in this area.”
Burnett added that Willis Towers Watson will soon be launching a risk transfer solution for this previously uninsurable risk, in partnership with technology and reputation intelligence firm Polecat.
“We believe that this combined approach will deliver reputational risk solutions to address our clients’ needs,” he said.
