The increased focus on ESG concerns has prompted many organizations to put a greater emphasis on reputation risks, according to Willis Towers Watson. In a global survey of senior executives, environmental, social and governance issues made up three of the top five reputation risks of greatest concern for companies.
As a result of these concerns, 26% of companies now place reputation risk in the top three on their risk register, up from 18% in 2021, and 55% consider it to be a top five risk. However, many companies are unprepared to manage reputation risks—only 14% link a formal governance process for reputation risks to board KPIs, down from 23% in 2021, and only 13% rated their resilience to reputation issues as “very good,” down from 23% in 2021.
“The companies leading the reputation-risk maturity curve are those that think regularly about the potential strategic and financial impacts of incidents and do so in the context of the evolving influence of ESG and social media,” said Hugo Wegbrans, WTW’s global head of broking. “Companies should hold regular, formal, board-level discussions about reputational risks, and proactively assess not just the threats, but also the reputational opportunities that may come with a crisis.”