4 Types of Reputational Risk - Deepstash
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

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 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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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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1. Don't Put It Off 

Risk management is incredibly stressful, especially as a beginner. Because of this, you may have a strong urge to put off certain aspects of risk management until a later date.

  • Fight that urge and handle any risk mitigation duties as soon as possible.
  • Make the hard decisions sooner rather than later because the alternative to procrastinating is much worse.

Putting off these difficult choices and decisions can limit your options in the future and can even cause more risk to develop as a result.

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It is not always possible to anticipate the effects of unexpected events that occur throughout the business cycle.

But those who routinely examine the way risks propagate across the entire value chain are better prepared for second-order effects.

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Crisis Management

Crisis management refers to the identification of a threat to an organization and its stakeholders in order to mount an effective response to it.

Due to the unpredictability of global events, many modern organizations attempt to identify potential crises before they occur in order to sketch out plans to deal with them. When and if a crisis occurs, the organization must be able to drastically change its course in order to survive.

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