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.
Good point. Do you think that a key factor here is that people tend to prioritise the risks that they can quantify higher than those that they can’t (or are more difficult)? I have always found that contactual risks, for example, always get people excited wheras reputational risks are sidelined despite the fact that they would have a massive finacial impact if they hit.
Keith, you have crystallized my thoughts precisely. Forget about prioritizing only the risks people “understand”, I submit people cannot even identify them or see the causality between elementary causes and effects.
I once did a risk identification and assessment exercise and the “wisdom of the crowd” assessed the BCP-related risk as the second-lowest risk out of 50! I attributed this low assessment to folks simply not understanding what this was all about.
It was well documented that the two killers at Columbine High School wanted to fly a plane into the WTC years before 9/11/2001. So it’s not as if no one else had ever thought about this event; for most people it was just too unlikely and “icky” to think about.
Perhaps if we don’t think about it, (whisper) it might just go away.