INDUSTRY FOCUS
Majority of businesses exposed to reputational risk
Businesses are becoming increasingly vulnerable to reputational risk, with 70 per cent of companies having been exposed to a potentially damaging episode, according to the fifth annual Global Risk Landscape Report produced by accountancy and business advisory firm BDO LLP.
BDO’s survey of 500 C-Suite executives across the EMEA, Europe, the Middle East, Africa, Asia Pacific and the Americas shows that companies are alert to the dangers, with 25 per cent saying shareholder price is a primary consequence of reputational damage, with a quarter also believing customers will take their custom elsewhere.
Family-run business and manufacturers felt the highest reputational risk.
Despite the threat, less than half (45 per cent) of companies believe their crisis strategy is proactive and over a third (35 per cent) considered themselves to be reactive when it comes to reputational issues.
BDO’s survey reveals the scale of so-called ‘integrity washing’, with businesses worrying more about the perception of integrity than the practice. A significant proportion of those polled (87 per cent) believed their organisation was culpable and almost half (49 per cent) admitted to the practice.
Nigel Burbidge, global chair of risk advisory services at BDO LLP, commented: “Clearly integrity is vital, with 99 per cent of respondents agreed on that. Being trusted confers extraordinary advantages to a business and secures customer loyalty. Customers flock to brands they believe in, and that sense of integrity allows the company to outperform rivals.”
Bribidge added: “However, we found deep disagreement on who’s responsible for transparency. One-in-three companies admits to being reactive on reputation. That’s not the best strategy. A worrying 87% say their company may be guilty of integrity washing. Clearly there is work to do. Integrity should be woven into the fabric of a company. Everyone must share the same ethos.”
