Reputational risk

The reputational risk is for a company , the risk of negative economic effects resulting from damage to the reputation may arise a company. It is part of the entrepreneurial risk and can be taken into account as part of risk management .

causes

Reputation risks can generally arise from a serious deterioration in the earnings situation , a significant deterioration in the financial situation due to impairment of assets , changes in strategy , payment disruptions or bad debts of significant debtors / borrowers , product recalls as a result of extensive defective production or operational risks . A prolonged corporate crisis can also contribute to a deteriorated reputation. These events can by publications in the mass media in a negative perception in the public ( customers , counterparties , shareholders , creditors , investors , financial analysts and rating agencies perform). The reputational damage can result in falling market capitalization , deteriorated or terminated customer relationships , poorer ratings , and in the case of credit institutions also deteriorated refinancing conditions with higher refinancing costs and more difficult access to the interbank market .

meaning

The reputation is also referred to as the "good name" or the "good reputation" or the "reputation" (of a company ). In doing business there is the possibility that the reputation of a company will change. In regulated markets , the regulators try to influence the reputation of the individual companies through sanctions and a uniform set of rules . Examples of this are the chambers of crafts and the BaFin .

Basically, a company strives to achieve a high level of customer loyalty through a high reputation in order to gain a competitive advantage over its competitors. Possible areas in which the reputation can be sustainably increased are:

• trust
• working conditions
• environmental Protection
• Sponsorship
• Informing the public
• Stakeholder dialogues with non-governmental organizations (NGO)

Ethical behavior can improve the reputation of a company. The reputation is also taken into account in the ratings of rating agencies. In this respect, the reputation is to be understood as the effect of the business ethics practiced in a company.

See also

• Reputational Risk Management

Web links

• Henner Schierenbeck, Marc D. Grüter, Michael J. Kunz: Management of reputational risks in banks. (PDF, 345 kB)
• Hans-Peter Klassen: The Value of Strategic Risk Management. (PDF, 72 kB)
• Michael Pohl, Simon Zaby: Reputational risk management in banking and its implementation. (PDF, 481 kB)

Individual evidence

1. ↑ The Basel Committee on Banking Supervision defines reputational risk as "... the risk that negative publicity about the business conduct and business relationships of a bank, whether applicable or not, compromises trust in the integrity of the institution." BIZ Basel: Banks duty of care when making a determination the customer identity. PDF file p. 9.
2. ↑ Gerhard Hofmann (Ed.): Basel III, Risk Management and New Banking Supervision , 2015, o. P.
3. ↑ Werner Blum and Monika Roth: Why compliance pays off. An integral part of the value chain. Special print from the “Neue Zürcher Zeitung”, focus of the economy from Saturday / Sunday, 18./19. May 2002 No. 113 (PDF) ( Memento from February 15, 2005 in the Internet Archive )
4. ↑ Oldenburgische Landesbank AG Annual Report 2006, p. 24 (PDF) ( Memento from September 27, 2007 in the Internet Archive )
5. ↑ Christian Bussler, Alexander Fonari: social and environmental standards for companies: benefits and limitations. Munich 2005.