Company reputation and the fallout from reputational damage are the highest priority strategic risk for large companies, according to the results of a global survey report by Deloitte.
Reputational risk was ranked third among strategic risk concerns three years ago, according to companies surveyed. Also back in 2010, brand and economic trends were identified by senior executives as the key strategic risks, though both have fallen since. In some industry sectors, reputation has risen from outside the top five strategic risk concerns to the top of the list. In the energy and resources sector, for example, reputation ranked only 11th on the list of strategic risks in 2010, though three years later has risen to the top spot.
The rise of reputation risk as the key strategic risk is mirrored by executives listing social media, which has transformed reputation management as the biggest technology disrupter and threat to their business model. Nearly 50 percent listed this above other technologies such as analytics, mobile applications, and cyber-attacks.
“The rise of reputation as the prime strategic risk is a natural reaction to recent high profile reputational crises, as well as the speed of digital and social media and the potential loss of control that accompanies it,” explained Henry Ristuccia, Deloitte Global Leader, Governance, Risk and Compliance. “The time it takes for damaging news to spread is quicker, it goes to a wider audience more easily, and the record of it is stored digitally for longer. Even in an environment where economic conditions remain tough and technology threatens business models, this is why companies place reputation at the top of their strategic risk agenda.”