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Risk of Risks

  • Chapter
The Reputable Firm

Part of the book series: Management for Professionals ((MANAGPROF))

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Abstract

Reputation risk can be defined as a situation or series of events affecting a company that can either strengthen or weaken the company’s credibility and the trust of stakeholders in the company. The manifestation of reputation risk can cause direct business losses and weaken significantly a company’s legitimacy. Reputation risks typically involve considerable negative publicity. What is essential is that the creation of reputation risk is not dependent on the real state of affairs but rather on the views of stakeholders regarding the situation. In the era of digital communications, crisis management skills play a guiding role in navigating companies through a sea of reputation threats. Mistakes, accidents, and failures happen to all companies. It is not so important what caused the situation, but rather how the situation is resolved and how the acute crisis is managed.

It takes many good deeds to build a good reputation, and only one bad one to lose it.

—Benjamin Franklin

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Notes

  1. 1.

    Beck (1992).

  2. 2.

    Scott and Walsham (2005).

  3. 3.

    In a reputation risk study conducted in 2009, communications and risk management professionals representing Finnish companies were asked to describe reputation risk and the role played by the Internet and social media in emerging reputation risks and reputation management. The study constructed four conceptual categories of reputational risk: characteristics, causes, control, and interfaces.

  4. 4.

    Deloitte (2014) Reputation@Risk, 2014 Global survey on Reputation Risk.

  5. 5.

    Deloitte (2014).

  6. 6.

    Schillings (2014).

  7. 7.

    AON/Oxford Metrica (2011). Reputation Review.

  8. 8.

    Deloitte (2014).

  9. 9.

    http://www.greenpeace.org/finland/fi/kampanjat/palmuoljy/Neste-Oil/Neste-Spoil-Annual-Report-2011/; http://www.greenpeace.org/finland/en/media/Press-releases/Greenpeace-wins-the-dispute-over-Nestespoilcom-spoof-site/; http://mhj.tc/post/23601368236/neste-oil-has-isp-close-parody-site-on-ipr-grounds; http://www.wipo.int/amc/en/domains/search/text.jsp?case=D2012-0891, accessed 11.20.2014.

  10. 10.

    Deloitte (2014).

  11. 11.

    McKinsey (2014).

  12. 12.

    http://www.bbc.com/news/business-30532463

  13. 13.

    Sako (2014).

  14. 14.

    Economist Intelligence Unit (2005).

  15. 15.

    Schillings (2014).

  16. 16.

    Deloitte (2014).

  17. 17.

    Ecceles, Newquist, and Schatz (2007).

  18. 18.

    Aula (2010).

  19. 19.

    http://www.marketingvox.com/mazdas_blogviral_campaign_falls_flat-017206/; http://www.whatsnextblog.com/mazda_pulls_fake_blog_was_it_a/; http://www.businesslogs.com/business_blogging/mazdas_blogging_mishap.php, accessed 2.5.2015.

  20. 20.

    Burson-Marsteller & Penn, Schoen, and Berland (2011) Crisis preparedness study.

  21. 21.

    Laaksonen et al. (2012).

  22. 22.

    Source: Amnesty International, 2010.

  23. 23.

    Digitoday (2010); Greenpeace International (2010).

  24. 24.

    See Laaksonen et al. (2012).

  25. 25.

    Burson-Marsteller & Penn, Schoen and Berland (2011).

  26. 26.

    EisnerAmper (2012). Concerns about risks confronting boards. Third annual Board of Directors survey.

  27. 27.

    Schillings (2014).

  28. 28.

    Schillings (2014).

  29. 29.

    Deloitte (2014).

  30. 30.

    Deloitte (2014).

  31. 31.

    Burson-Marsteller (2006) 15 Early Warning Signs of a Company’s Failing Reputation. Early warning signs are shown as written in the survey and in rank order. The survey was conducted among 685 global business influentials in 65 countries.

  32. 32.

    Deloitte (2014).

  33. 33.

    Schillings (2014).

  34. 34.

    Murray (2004).

  35. 35.

    Gatzert, Schmit, and Kolb (2013).

  36. 36.

    Gatzert et al. (2013).

  37. 37.

    Gatzert et al. (2013).

  38. 38.

    Schillings (2014).

  39. 39.

    Gatzert et al. (2013).

  40. 40.

    Kolakowski (2011).

  41. 41.

    White paper based on a survey of 269 senior risk managers, as well in-depth interviews with executives. (Source: The Economist Intelligence Unit, 2005)

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Authors and Affiliations

  1. University of Helsinki, Helsinki, Finland

    Pekka Aula

  2. Pohjoisranta Burson-Marsteller, Helsinki, Finland

    Jouni Heinonen

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  1. Pekka Aula
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  2. Jouni Heinonen
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Aula, P., Heinonen, J. (2016). Risk of Risks. In: The Reputable Firm. Management for Professionals. Springer, Cham. https://doi.org/10.1007/978-3-319-22008-6_7

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