UK risk management association Airmic, the Risk and Insurance Management Society (RIMS) and data and insights provider the RepTrak Company have released a report on the future of reputational risk management.
The report, titled “Closing the Gaps on Reputational Risk Management”, draws on interviews with over 40 leading risk professionals in Europe and the US about ways reputational risk management can be improved.
Professors and industry thought-leaders were also brought together in working groups to discuss challenges and best practices. The resulting report provides guidance to help close the gaps on reputational risk management.
According to the report, risk professionals face six challenges to understanding and addressing risks to reputation: unclear definition of reputation; confusion on the categorisation of risks to reputation; no commonly agreed upon, consistent measurement of the business impact from specific risks to reputation; no framework for linking the strategic, operational, and tactical aspects of reputational risk management; an absence of integrated ownership and accountability across organisations; and slow development of solutions for risk transfer including insurance.
The report states that risk professionals today are at a crossroads, where they can follow one of two paths: the first, where they have the responsibility but no influence and control; or the second, where they can contribute value to the organisation by leading implementation of a structured, data-driven and systematic approach to reputational risk that draws the whole organisation together around a common framework.
Julia Graham, deputy CEO, technical director, Airmic, said: “We hope this guide to reputational risk will encourage and help more risk professionals to travel the second path.
“We are delighted to have worked with RIMS and RepTrak on this paper, which puts forward a guide for risk professionals to work strategically with others within their organisations, to measure and tackle reputational risks today.”
Hoe-Yeong Loke, research manager, Airmic, added: “As organisations manage issues arising from the COVID-19 pandemic, they face increasingly interconnected and complex risks.
“Reputational risk takes on even greater importance. Previous studies from Airmic and RIMS suggest that the risk community continues to struggle with reputational risk, and with reputation as an intangible asset.
“There is a gap between what senior executives and risk professionals know is important to manage and the work that is being done.”
Carol Fox, VP strategic initiatives, RIMS, continued: “During our research journey with Airmic and RepTrak, we learned from our collective focus group participants that unlocking reputational value is as important as closing reputational gaps.
“Greater collaboration between risk and corporate communications professionals in using data to detect reputational risk early on helps unlock reputational value as well as produce an agile and decisive crisis management response.”
Kasper Ulf Nielsen, RepTrak chief strategy officer and co-founder, noted: “Most organisations deal with reputational risk at the operational level only. This is not out of choice, but because they lack the data and framework to bring the operational and the strategic together.
“Frameworks such as the RepTrak reputational risk framework with its use of the seven drivers of reputation, provides a basis for measurement, monitoring and collaboration between different functions within an organisation.”
Airmic, RIMS, RepTrak, Report, Risk Management, Insurance, Reinsurance, Julia Graham, North America