While it’s easy to think of a company as just the products and services it provides, there is of course a lot more than that. Without the human talent factor behind those products and services, we would cease to have businesses. Unfortunately, those same employees that add value to the company can also create corporate reputation risks.
Remember the story a few years ago about the insurance company that offered incentives to its employees to close claims, and the myriad of bad press that followed? Or the car maker that decided to forego certain quality assurance tests in order to get more vehicles off the line? Their reputation took a hit as well.
While closing more claims or rolling out more vehicles may have immediate advantages, it’s important to remember that no action is without a consequence. Einser Amper’s 2013 Board of Directors Survey reveals that directors are cognizant of the importance of building and sustaining an ethical culture. Nearly three-fourths of board directors said that damage to their company’s reputation is the biggest risk they face following financial risk. The board directors identify issues central to the GRC industry—integrity, fraud, ethics and the FCPA—as the most influential issues shaping their reputation. As a result, corporate risk management and compliance training surrounding company policies has seen a steady increase since the 2012 survey.
Brand reputation risks are only amplified today with the presence of social media. That same report from Eisner Amper points out that social media opens companies up to added risks. Every additional form of interaction, whether it be a post or a tweet has the potential for a negative response, to the extent of legal action, that can tarnish your corporate image. Company directors can add digitial risk to their compliance risk management challenges.
We know that reputation risks are always lurking, but that doesn’t mean they need to come to term. A good starting point to prevent these risks is to re-examine your policies, and from there, employee communication is crucial. Remember to implement engaging compliance training—not dated and corny material—to train your employees about risks that could impact your reputation..
Third Party Risk
It is no longer enough to ensure a commitment to ethics and compliance within your own company. The new global expectation is that you know who your third parties are, have vetted them, and are consistently monitoring for misconduct and remediating incidents that occur.
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