Any gap between how you want to be perceived and how you actually behave as a company is a risk. Henry Ristuccia, global leader, Governance, Risk and Compliance Services, Deloitte Touche Tohmatsu Limited, discusses why reputational risk requires a fundamentally different approach from traditional risk management practices and steps … There’s good reason to place a high priority on reputation risk – according to a study by Ocean Tomo, intangible assets like reputation account for around 75% of a company’s market value today, while in the mid-1980s, it was less than 1/3. Adopted by the Board of Managing Directors in 2016, the policy covers the main elements of the process chain, from coal extraction to coal-fired power generation. However, extreme cases may lead to bankruptcy (as in the case of Arthur Andersen). Threats can spring from many different sources (see Exhibit 1), and stakeholder tolerances can fluctuate. reputation risk is as monolithic as reputation itself. He is also a published author, and can be reached … Its impact is very real. The purpose of this document is to elaborate an effective approach of managing reputational risks in banks. Reputation risk is any threat to your company's good name. • When an event had a reputation risk impact, the total losses were on average almost double the announced losses. Formal governance committees exist at global, regional … Applying the reputation risk lens – once you know what your relevant risks are, especially the strategic one’s, it is essential to apply the additional layer of reputation risk analysis – this entails having a keen sense of who your main stakeholders are.. 3. But people continue to ask the question – how can the impact of reputation risk be quantified? PRM Exam III, Risk Management. A 2017 Global Risk Management Survey conducted by AON Risk Solutions polled 1,843 respondents from public and private companies of all sizes, across a wide range of industries, in more than 60 countries. Other risk terms are seen as potential consequences of operational risk events. So whenever someone tells you about an N standard deviation event, remember that the probability may be as high as 1 in N 2 + 1, or as low as flipping N 2 heads in a row (or even lower). Types of Operational Risk. So, the discussion here, which aims to provide an idea of the types of solutions currently available, is fairly general in nature. Commerzbank’s binding reputational risk management policy on coal-related business is another example of the Bank’s sustainability approach. Another key risk is, if there is a big disruption to services – say your outsourcing company goes bankrupt or there's another major business continuity effect – can you bring that activity back in house and can you do it quickly?" Make sure you consider the range of risks, and if everyone is thinking about the market risk, take a minute to think about reputational risk or funding risk as well. Strategic Risks 1. Learning from disaster – The Tacoma Narrows Bridge. #3 – Reputational risk: This is also a critical type of business risk. Financial risk is a type of danger that can result in the loss of capital to interested parties. Reputational risk is the risk of damage to a bank’s image that occurs due to some dubious actions taken by the bank. 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