What is the risk of reputation?

The risk of reputation is to damage the value of the company's company caused by a negative public opinion. This can happen for many reasons and may have a weakening effect on the value of shareholders. This may occur as a result of promoted problems in society or due to the spread of rumors. Another source of reputation risk is the problems with the company's products.

Any commercial enterprise is making a lot of effort to establish and maintain its good name. Large companies spend hundreds of millions of dollars on an image or a general advertisement aimed at promoting a public image of the company. For example, oil companies routinely create broadcasting and printing advertisements that promote their environmental projects and are generally present as good corporate citizens.

If the company gets a good reputation, it usually protects it. This is often beneficial to consumers because one of the Easiest ways that society can suffer a reputation risk isProviding a bad customer service. In all industries, for example, there are companies that will repair or replace their dysfunctional products for consumers, regardless of the cause and no matter how old. Some will not require proof of purchase. They do this to emphasize the fact that they are behind their products, and generally ensure deep loyalty to customers when such exchange or repairs.

The risk of reputation can be caused by negative reports on the company's business practices. For example, Arthur Andersen was one of the five largest accountants and audit firms in the world, and in 2001 he was one of his main clients ENRON, Texas-with Energy. Enron collapsed at the end of that year because of a number of dubious and illegal financial practices, and Arthur Andersen was subsequently convicted of the obstruction of justice for her part in the scandal. Damage to Arthur Andersen's reputationAnd it was instant and catastrophic and his clients fled to the flocks. Before the difference was nothing different that the convicts in 2005 would turn over the Supreme Court - until then he had lost all his customers. Although it has never been formally dissolved as a partnership, there is little chance that Arthur Anderson will again be a viable enterprise.

Company products are also a reputation risk. In the United States, the famous case appeared in the autumn of 1982, when seven people in the Chicago region died after taking the poisoned capsules of Tylenol, the popular over-the-Countter Painkiller. The brand could eventually recover, but the company lost more than $ 100 million (USD), including a memories of more than 31 million bottles of products from retail places and hospitals throughout the country. More recently, Toyota, the automaker, suffered a serious risk of reputation due to several well -promoted Saproblem with feta, which allegedly caused several fatal accidents. It is the potentiall of this risk for their reputation integrity, which leads the company's executives to take any measures necessary to prevent the product from being induced.

Rumors are another type of reputation risk that can cause considerable damage. They are often caused by people who are angry above the practices, principles or products of the company - such as employees, current or former and customers. Protection of reputation is a growing Internet industry, while Internet security companies promise to monitor the reputation of the company and keep it clean; For example, if rumors about society on a social network begin to spread, reputation defenders will enter and stop the reputation and remove any negative links to the client from the website.