The Reputational Risk

Reputational risk can be defined as a loss of reputation that is a loss of potential business by a firm or company because it’s performance is called into question. The building and maintaining of reputation are a vital and value able asset for all the kinds of institutions either it is financial or non-financial. In every field of life, we have certain levels of reputations. A social media activist should attain reputation by a different method than the business man. Whatever the field may be, and whatever the region on earth we need a good reputation in our surroundings to grow up and to build ourselves. But when we earn a good reputation, we always have a fear of losing it. Attaining a good reputation is not a big task but to maintain your success and reputation is really a difficult job. Reputational risk is the biggest and the hidden danger. Reputational risk is like a pendulum that moves all the time on the senses. It seems like it’s a tough job to reduce or remove the reputational risk but in actual, it is not really as difficult task as it looks. To understand and remove the reputational risk one should really know everything about the reputational risk. Whatever the firm, organization and company or the field of business everyone agreed that there is a reputational risk. But it is not an impossible task to reduce or mitigate the reputational task rather it is a tough job. The reputational risk manager should know about the certain things to understand and mitigate the reputational risk which is given below:

  • Amorphous
  • In value-able
  • Vaguely transferable


Before making any kind of preventions one should know why reputational risk occurs. There are some following reasons that reputational risk occurs:

  • It may occur due to internal fraud in any company
  • Due changing expectations of stakeholders, investors and customers
  • Due to weak coordination
  • Directly it may occur in result of company’s misdeed
  • Indirectly by the irresponsible behavior of employees

These are some facts due to which a reputational risk may occur.


There are lots of methods for measuring the reputational risk. In some cases, reputational risk occurs   due to misbehavior of employees. The reputational risk is a continues prevailing threat posed to the high reputational companies. The reputational risk can be measured by a team of reputational risk manager. The reputational risk manager should be aware of all the situation thoroughly. The reputational risk survives everywhere in the highly reputable markets. Reputational risk management becomes very famous for some year in the economic world. A company cannot run without reputational risk management. Because a sudden act by the business rivals can destroy all the economy in just a second. The companies should adopt appropriate strategies to measure the reputational risk. To keep your business away from the reputational risk each company should keep in mind the following precautions:   

  • Crisis management should be there
  • Company should have emergency response planning
  • Business should not be stopped in the time of crisis
  • Who has created the reputational risk?
  • Keep an eye on each employ in the company
  • Buy insurance
  • Restrict high-risk customers
  • Control productivity rate
  • Characteristics of the world class preparedness programs                                                                       

 These are some measuring preventions one can stop reputational risk to some extent by implementing these terminologies. 


Reputational risk can be reduced, by adopting different techniques. If there occurs a reputational risk the company owners should make a strategy and by this strategy thoroughly determine all the features that might be the cause of reputational risk.

  • First of all, assess the reputation in the minds of the stakeholders and investors.
  • Make an efficient communication with the board of directors, stakeholders, investors and employees.
  • Then assess your reputation among the people in the society.
  • Know about the current position, threats and vulnerabilities in the firm.
  • Then first know about the known facts and then the unknown facts of the firm.
  • Deeply examined strategies and risks.
  • Evaluate the reality about the company’s performance in the key matrix. Along with the customer’s, stakeholder’s and investor’s point of view also observe the opinion of employees, neighbors, and other officials. Then you would explore all the situation.
  • If, there is any gap between the reality and people expectation, then just close that gaps.
  • Also, observe and know about the changing choice of your customers. Do a survey and get the public view that what they really expect from your company.                                                                                       
  • Make a reputational risk management which can then control the reputational risk.


Reputational risk can be managed by the strong governance. We all know that reputation builds up in a long time and can be destroyed in a second by a misdeed. The company should have certain strategies and policies for the mitigation of the reputational risk when there is a sudden reputational risk occurs in your company. All the staff should be tested once after one or two months. As the world has made so much progress so we can manage or mitigate the reputational risk with the help of the modern technology. With the help of this technology, we can make a check on the staff in the company. as all the accountability, employ’s information, financial data and company’s all policies are stored on the computers so the computers should have a very strong database so nobody can hack this data. In the time of crisis, the employees should have better behavior and communicating skill with the customers. Never spoils the piece of land where all process of a company is implanted, by the pollution or the waste materials. Because people don’t bother this critical situation. Always prepare the product of people choice. However, in the different regions of the earth, there are different nations so choices should by change according to different region and areas in the world.

We don’t have any rivals before getting good reputation but have after it. So, one should be aware of his enemies after getting success.

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