Blog post

How Much Is Reputation Worth?

When customers first hear your brand’s name, what do they think?

Business is a money-driven sector, with revenues, profits and cash flow important considerations.

Many functions can impact on a company’s ability to generate positive revenue, and your reputation is one of the most vital.

Reputation a key business concern

A recent report from professional services and advisory firm Deloitte investigates how much companies value their reputation.

The 2013 edition found damage to a reputation was the No. 1 concern for business executives. This year, Deloitte partnered with Forbes Insight to delve deeper into reputation risk.

Released in October, the 2014 Global Survey on Reputation Risk found that:

“87 per cent of executives believe reputation is more important this year than in previous years”

“88 per cent say they are explicitly focusing on reputation as a key business challenge”

Reputation closely tied to revenue and value

Reputation problems tend to have the biggest impact on revenue and brand value, according to the survey. Respondents who have experienced a negative reputation event said the areas which were affected the most included revenue (41 percent), loss of brand value (41 percent) and regulatory investigations (37 percent).

In Asia Pacific, the concern over revenue and earnings was even higher, with 56 per cent of respondents from this region naming this as most significant factor impacted by damage to their reputation.

Who is responsible for reputation risk?

Most communications professionals would be quick to put up their hand when asked who was in charge of protecting their company’s reputation.

However, the Deloitte survey found that the responsibility for managing reputation risk actually falls on the shoulders of those in the executive-suite. Just over one-third (36 per cent) of respondents named the CEO as the key player, followed by the chief risk officer (21 per cent), board of directors (14 per cent) and chief financial officer (11 per cent).

What should you be keeping an eye out for?

There are unfortunately many things that could potentially damage your company’s reputation the public eye. These include ethics and integrity risks (55 per cent), such as fraud and corruption. This is followed by security risks (45 per cent), like physical break-ins and cyber breaches. Finally, respondents also named product and service risks (43 per cent), including those that may impact on safety, health and the environment.

Looking to the future

Reputational risk is a growing concern across the globe, so it is not surprising that many companies are planning to increase their investment in risk management strategies.

In particular, more than three-quarters of companies in the Asia-Pacific region (78 per cent) are planning to invest more in data collection related to reputation. This includes media monitoring and surveying tools to track mentions on traditional and digital media platforms.

This report demonstrates how important it is for any business to be keeping tabs on their reputation. Receiving real-time updates and media analysis can give companies the ability to respond and manage negative reputation events before they affect the organisation as a whole.

Louise Wallace