A growing number of major global companies are investing substantial resources to manage their reputation risk and have increased their efforts to do so over the last three years, according to a new report from The Conference Board, the global business research and membership organization.

“Safeguarding reputation is even more critical today because companies have developed successful ways to make reputation risk management part of their overall risk management,” says Ellen Hexter, director, enterprise risk management at The Conference Board and co-author of the report with Sandy Bayer, president of Bayer Consulting.

“Although reputation is the quintessential intangible asset, a strong corporate reputation yields concrete benefits – higher market value, stronger sales, and an increased ability to hire the best and the brightest,” says Bayer.

More than three quarters of the respondents to the survey said their companies are making a substantial effort to manage reputation risk (82 percent) and they have increased focus in this area over the last three years (81 percent).

Other key findings of the study:

  • Reputation risk should be managed throughout the organization.
  • Only 49 percent of executives surveyed said that the management of reputation risk was highly integrated with their enterprise risk management (ERM) function or another risk oversight program.
  • Fifty-nine percent indicated that assessing the perceptions and concerns of stakeholders was an extremely or very significant issue, making it the highest-ranked challenge.
  • Media monitoring has become more sophisticated. Today, there are tools to assess whether coverage is positive, neutral or negative; the credibility of publications; the prominence of coverage, etc.
  • Efforts are being made to quantify the value of reputation. A select group of companies is making progress in this area by working with specialist consulting firms to quantify the impact of reputation on share price.
  • Social media are gaining influence, but most companies are ignoring them.

The findings spurred the following recommendations from The Conference Board Research Working Group:

  1. Actively involve boards of directors in reputation risk management;
  2. Demonstrate to leaders and management teams in business units the impact of their actions on reputation;
  3. Integrate reputation risk management with ERM or other risk management programs;
  4. Quantify the value of reputation; and
  5. Use and nurture employees as corporate ambassadors.

This is excerpted from the report “Managing Reputation Risk and Reward,” which is based on the findings of The Conference Board Reputation Risk Research Working Group and a survey of 148 risk management executives of major corporations.

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