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Dilemmas of Reputation Risk Management: Theoretical Study

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Abstract

Reputation is a very valuable resource of a contemporary enterprise because it may create its long-term competitive advantage and market value. A strong, positive reputation must be built in many years, while it can be damaged relatively quickly. There are many threats to reputation that in the current digital era are multiplied by the development of the Internet and social media. Therefore, the importance and need for the effective reputation risk management is growing, which, however, is a very difficult challenge for managers. In this paper, it was demonstrated that the dilemmas of reputation risk management stem from the complex, emotional, and rational structure as well as from the qualitative character of reputation, which generates difficulties in identifying the causes and sources of its threats. The qualitative character of reputation risk, fuzzy responsibility for reputation, and its protection as well as a lack of proper methods and tools to measure the reputation risk—these are the main problems that hinder the formulation of the acceptable concepts of reputation risk management and their implementation into practice.

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Fig. 1

Source Rayner 2003, p. 50

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Source Kucuk-Yilmaz and Kucuk (2010), p. 234

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Notes

  1. For example, the crisis of Cadbury’s product with salmonella from 2006 has had serious ramifications for the firm in terms of economic loss: £37 m including customer returns—£5 m, cost of stock destroyed—£10 m, remediation costs—£17 m, increased media spend—£5 m, and insurance recovery—£7 m (see: Carrol (2009).

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Authors and Affiliations

  1. Department of Organization and Management, Silesian University of Technology in Gliwice, St. Roosevelta 26-28, 41 800, Zabrze, Poland

    Danuta Szwajca

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  1. Danuta Szwajca
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Correspondence to Danuta Szwajca.

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Szwajca, D. Dilemmas of Reputation Risk Management: Theoretical Study. Corp Reputation Rev 21, 165–178 (2018). https://doi.org/10.1057/s41299-018-0052-9

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