Reputational risk catapults into the top five
Source: Asia Insurance Review | Dec 2023
With environment, social and governance (ESG) concerns rising to the top of corporate agendas, organisations are increasingly aware of the potential cost of reputational damage. However, as awareness increases, confidence in risk management systems and crisis response capabilities has fallen since 2021 according to a new report by WTW.
WTW’s 2023 Reputational Risk Readiness Survey Report released in November 2023 polled 375 senior executives from 20 countries, each responsible for risk strategy at their multi-billion-dollar global organisation. Together their companies span the retail, manufacturing, leisure, transportation, and NGO sectors.
The study found -
ESG risks are three of respondents’ top five reputational concerns. Reputation is now a top-three risk for 26% of companies, up from 18% in 2021, and a top five risk for 55%. The survey found that 95% have a specific budget for reputational events.
Just 10% engaged monthly with stakeholders on reputation issues, down from 37% in 2021. Only 14% link a formal governance process for reputation risks to board-level KPIs, down from 23% in 2021.
Only 13% said their resilience to reputational issues is very good, down from 23% in 2021. These findings represent a downgrading of risk management capabilities. However, it may be more of a reality check than a change in reality. As reputation risk is increasingly viewed through a finance and ESG lens, assessments of risk readiness are likely to be more rigorous and therefore less optimistic. A