• Reputational risk management fails to align with business objectives, study finds

    The link between reputational risk and businesses objectives can be difficult to quantify. As a result, many organisations are struggling to align the two, which can sacrifice positive public perception in the name of economic performance or vice versa.

    Risk is unavoidable for businesses, whether reputational or otherwise, and corporate affairs messages need to acknowledge its value in achieving business goals. However, these organisations also require professionals that can manage any incidents that may negatively affect the way a company is perceived by the general public. 

    The way risk and business success interact was detailed in a recent survey by Ernst & Young (EY), which found that perception management is often ignored in favour of economic objectives. 

    How are organisations managing reputation risk?

    EY found that, of the nearly 1,200 C-Suite leaders it surveyed, the vast majority are struggling to link risk management with business goals. While 97 per cent are making attempts in this regard, 85 per cent have failed to create a successful connection between the two. 

    The key issue, according to EY, lies in the communication issues between various leaders and the company's board. This can result in oversights that either cost organisations in terms of reputation risk or missed business opportunities.

    Global Risk Leader at the firm Paul van Kessel believes that, despite these issues, businesses are in a position to control their own risk levels. 

    "While this creates many challenges for organisations, it is important to think, manage and respond to risk differently: find where there's opportunity in risk and protect against the risk you would like to avoid," he explained. 

    Can organisations promote better decision making in this area?

    Corporate affairs leaders are tasked with making difficult decisions in these areas as they are often required to make choices that support reputation management without negatively impacting financial objectives. 

    In the case of significant decisions in large corporations, PricewaterhouseCoopers (PwC) reported that those who make data-assisted decisions usually find increased success in these areas. However, the firm found that only a third of organisations consider themselves "data driven". 

    Despite this fact, 94 per cent of respondents believe they are equipped to make tough decisions, suggesting a more analytical approach could enhance an organisation's ability to manage reputational risk.

    The Directors' Cut Survey produced by Deloitte also confirmed that many organisations haven't opened themselves to other opportunities for risk management. The firm found that 89 per cent take a consistent approach to these situations.

    The above examples illustrate the challenges corporate affairs leaders face when aligning reputational risk management with business goals, suggesting there is room for an evolution in decision-making processes. 

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