Reputation is harmed when some other issue makes reputation an issue. It’s nice to add reputation risk to your risk register, but what are you going to do about it? What actions will you take to proactively avoid, transfer or mitigate your reputation or your brand?
What could Tiger Woods’ risk manager have done to treat his reputation risk?
Imagine its Christmas 2008 and Tiger Woods is sitting in his Florida home with his beautiful wife preparing his personal risk register. What does it look like? What is his biggest risk? One might think his biggest risk as measured by impact is his ability to swing the golf clubs and putt, but he only makes a fraction of his millions from prize money; most of it comes from his endorsements. It is his reputation – the Tiger brand – which has earned him those big endorsement deals and hundreds of millions of dollars.
The events which have unfolded in the last three weeks illustrate that Tiger harmed his reputation and brand by his “transgressions” and “behavior”. Earlier today, Gillette effectively dropped Tiger Woods. Put another way, the downstream effect of his inappropriate intimacies – the things he could control – harmed his reputation.
Remember you cannot actually treat reputation risk. But you can treat its root causes. Go ahead and put reputation risk on your organization’s risk register but just accept it and move on. Spend your time and resources developing action plans to treat the root causes.