Reputation Management Scibd

8/6/2019 Reputation Management Scibd

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Jelena TasicUniCredit MBA alumnus



� http://www.youtube.com/watch?v=0yetHqWODp0

� Operational , Legal, Systemic, Counterparty,Market, Fx, Political, Environmental , etc.

� Reputation risk ´It takes twenty years to build a reputation

and five minutes to destroy it.µ (W. Buffet)



Business results

Strategic goals

Reputation & Branding

Initiatives

Advertising

Stakeholder Relations

Philanthropy

Employee Messaging

Community Initiatives

Research / Knowledge

Building MasterCard

ReputationProductsPerformanceGovernance

Leadership

Workplace

Citizenship

Innovation

Supportive Behaviors

towards MasterCard

Accept employment

Recommend to others

Use products



� Information asymmetry: Outsiders don·t know as much about a company as insiders, so

a good reputation alleviates and allow customers to make a choice.

� More important in a period of rapid changes, globalization, internet blogs, activism, massmedia.

� More than 90% think about reputation in investment decisions: 40% care aboutreputation, 50% care partially.

� McKinsey Quarterly survey (2009):¾ 85% of top executives worldwide claim that public trust in business has deteriorated

¾ 72% of them say commitment to free markets had gone down

http://www.soa.org/files/pdf/lsprng07-001-rochette.pdf , www.mcKinseyquarterly.com, www.edelman.com



� FSA(UK): The risk that the firm may be exposed to negative publicity -Trust -about its business practices or internal controls ² Actions -, which could havean impact on the liquidity or capital of the firm or cause a change in its

credit rating. -Affecting its stakeholders.

� US Federal Reserve(2004): ́ Reputation risk is the potential loss that negative

publicity regarding an institution·s business practices, whether true or not, will

cause a decline in the customer base, costly litigation, or revenue reductions

(financial loss).@

� Rating agencies usually base their evaluation on 3 criteria:

¾ Balance Sheet Strength

¾ Operating Performance

¾ Business Profile: Affected by reputation now and in the future. It is affected by allreputation risk drivers. Bases its rating on trust in management, enhanced by strongreputation, which is intrinsically linked to its capacity to manage its risk profile.



� http://www.youtube.com/watch?v=_dFoBnI5mPQ

� http://www.youtu

be.com/watch?v=58Dxm9WYDs0

� http://www.youtube.com/watch?v

=N86

2Pmi5CV4&feature=related



http://www.guardian.co.uk/environment/interactive/2010/jul/08/bp-oil-spill-timeline-interactive

http://community.nasdaq.com/News/2011-03/bps-2010-

performance-muddied-by-gulf-oil-spill.aspx?storyid=62608



� On Harvard Business Review blog, Andrew Wilsonoutlines five lessons (geopolitical, corporate-levelbranding, reputation, strategy).

1. Our reliance on old, fossil-fuel based technologies isdevastating for the planet, for society, and for business.

2. Preparing for a world where things only go right isextremely dangerous.

3. Downplaying your mistakes is, well, a big mistake.4. Environmental risks can threaten the viability of a

business.5. Companies can lose the reputation as a sustainability

leader very fast.

http://blogs.hbr.org/winston/2010/06/the-bp-oil-spill-top-5-lessons.html



� Annual study in the US ranking the most visible andreputable companies

� Based on a poll of almost 30,000 people,

companies were ranked on a "reputationquotient," calculated by a variety of publicperceptions, including vision and leadership,financial performance, social responsibility, andperceptions of work place environments.

� http://www.fastcompany.com/1612020/does-corporate-image-matter



Three dimensions that are

driving Google·s reputation:vision and leadership,

financial performance, andperceptions of work place.

There is a halo effect

because the public'sperception of Microsoft·s

social responsibility mixes withthe Gates Foundation.

This is as high as Apple has been.

Over the past few years, it's less aproduct focus, and more thingslike social responsibility, consistent

financial performance, andvision and leadership that createcorporate image--and we break

this down into a culture ofleadership. Apple has done

poorly in categories you wouldn'texpect, because in vision andleadership there was often this

sense that it all resides with Jobs.



Why are Goldman Sachs and JPMorgan, who actually fared the

financial crisis relatively well,almost tied with Citigroup (#57),

which performed terribly?

For the behaviours of "want" thatimpact their business - like

willingness to purchase products--there is nearly a direct

correlation between thosebehaviours and reputation.This study measures only the

general public, but reputationhas just as much impact on

stakeholder groups thatcompanies have to manage. Wewere actually a little bit surprised

to see JP Morgan lumped inthere, because we've seen that

more informed audiencesdistinguish the company from

Bank of America and Citibank.Here they were probably gettingthe negative perceptions on the

whole industry. In our generalpopulation study, we were alsoable to segment out the 15% to18% that would be consideredopinion leaders or influentials,and JP Morgan actually has a

better reputation with thatsegment, and Citigroup has

actually a much lower

perception.



� The identification of reputation risk is closely linked toattempts to manage such risks.

� The practice of reputation management encompasses abroad range of activities, including corporate governance,integrated organisational management, Public Relations, CSRreporting, etc.

� Strategically, it is about understanding the company·sresponsibilities towards its stakeholders, including addressingthe stakeholders· different interests and the risks particularlyconnected to different groups.



� There are three distinct tasks to managing reputational risk: establishingreputation to begin with, maintaining it through the rough and tumble of businessoperations, and restoring it when it has been damaged.



� They can directly (Larkin, J. 2003):¾ Reduce tension between business, its shareholders and customers

¾ Reduce barriers to competition and market development¾ Create a more conducive environment for investment and access to capital

¾ Attract the best recruits, suppliers and partners

¾ Secure premium pricing for products and services¾ Reduce share price and market volatility¾ Minimize the threat of increased regulation or litigation

¾ Reduce the potential for crises¾ Establish trust and credibility with stakeholders

� As a consequence of all of the above, they are instrumental in ensuring:improved asset valuation, enhanced market differentiation, increasedinvestor support, improved transparency, more effective risk management, less reliance on crises management, sharpened responseto increasing 3rd party initiatives to measure sustainability performance,enhanced capacity to attract and retain the best employees, providinga framework for constructive engagement with stakeholders, rumour reduction, countermeasures for emerging risks, etc. (Brewer, L. 3003).

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