What Is Reputational Risk? [+ Real Life Examples] - Deepstash
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Reputational Risk

Reputational Risk

This is defined as any sort of threaten or danger that can damage the good standing of your business and negatively impact your reputation with consumers and overall business success. 

Such risks are usually unexpected and occur with little to no warning. All kinds of reputational risk can cause consumers and sometimes business owners to lose confidence in the business.


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4 Types of Reputational Risk

4 Types of Reputational Risk

  1. Direct actions of your company and company practices: actions included here could be by not complying with regulations, data breaches due to unsafe practices, or internal scandals that become public knowledge.
  2. Actions of anyone who directly represent your business: employees who poorly represent your brand to others, business leaders with negative reputations, or employee misconduct
  3. Direct actions by partners or suppliers: partners or suppliers who speak ill of your business or engaging in misconduct
  4. External Factor: Customers: negative social media posts or negative press


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Reputational Risk Management

Reputational Risk Management

Listed down below are some practices that could lessen the likelihood of reputational risk scenarios:

  • Prioritizing customer satisfaction
  • Listening to customer feedback and acting on their needs
  • Compliance with legal rules
  • Responding to online reviews and managing the conversation
  • Consistent monitoring of product quality
  • Maintaining safe work environments for employees, physically and mentally
  • Having and accepting that everything and anything can affect public perception of your business and has the potential to risk your reputation


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Mitigating Risk Management

Mitigating Risk Management

Mitigating reputational risk involves lessening the blow when a threat occurs, essentially getting out in front of the problem. 

Acknowledge that it is occuring and have your PR team create crisis messaging that will help your business explain what is happening to the consumers. Then, explain what you're going to do about the issue and be transparent.


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