Reputational risk is defined as the possibility that a company or organization has of suffering a loss in its reputation. Which may have a negative impact on the way it is perceived by the environment and, therefore, on its ability to achieve your business objectives or to be sustained in the long term. In this sense, making a rigurous evaluation of the potential sources of reputational risk helps to identify them in advance in order to reduce their incidence.
Why is an assessment of potential sources of reputational risk important?
One of the most important keys when it comes to minimizing reputational risk and being able to safeguard or improve a company’s digital reputation has to do with being able to make an early assessment of potential sources of reputational risk. This is what will allow these potential risks to be identified in advance. Taking the necessary effective actions to prevent them from actually leading to a loss of reputation or what is known as a reputational crisis.
In order for the analysis to be effective, what is recommended is that the different parties that make up the company or organization can be part of the search for potential sources of reputational risk. This is what will allow you to identify these internal and external sources, being able to decide what to do about it to avoid its consequences.
On the other hand, once these potential sources of reputational risk have been identified, it is very important to make an assessment. Both the occurrence of these risks and the impact that each of them may have on the company’s reputation. One of the most appropriate and complete ways to do this is by quantifying the losses that can occur in the company and that are related to each particular reputational risk. This will allow us to have a certain vision of the expected reputational loss for each risk.
Reputational risk, what types are there?
Now that we have seen what we understand by reputational risk and the importance of making an early and rigorous assessment of potential sources of reputational risk, we want to tell you about the different types that you can find. In this sense, we can speak in the first instance of what is considered pure reputational risk. This is the one that occurs when the risks derive from complex issues such as the transparency of the company, the trust that it arouses in users, the conduct that the company has in terms of social or environmental commitment, among other things.
In the second instance, we can talk about what is known as operational reputational risk. This is the one that comes particularly from operational risks and errors or malfunctions that may occur in this regard. What it does is impact the reputation due to internal mismanagement. Sometimes, companies that fall into these types of risks may need to be rescued due to losses incurred due to such malfunction.
Carrying out a rigorous evaluation of the potential sources of reputational risk not only allows knowing what risks a company must take and what actions to take to prevent them. But also provides the necessary tools to identify the losses that could come from these risks. Therefore, making an exhaustive and detailed evaluation of reputational risks and taking actions accordingly is necessary for the support, survival and growth of a company.
At 202 Digital Reputation we are an agency specialized in digital reputation. We approach the different stages of digital or corporate reputation with a 360° methodology, from prevention to crisis management and reputational maintenance. Contact us and find out much more about it.