4 risks that can affect your company's reputation
written by Juan Pablo Calle, On September 18, 2019
Corporate image is any company's most important asset. If an organization is perceived in a positive light by the public, the level of trust grows, and commercial and institutional relationships are strengthened.
Therefore, the management of reputational and associated risks are one of the top challenges for any entity.
Reputational risk is the one caused by an unfavorable perception of a company's image by customers, shareholders, suppliers or regulatory bodies.
However, there are certain operational risks, caused by failures in processes, technology, infrastructure, human resources or the occurrence of external events, that have a greater impact than others on the public perception.
Recognizing those most likely to affect your reputation will help you know what to do if they do occur and are disclosed. Therefore, we are explaining 4 of them here.
1. Internal fraud: human factor
Fraud, conflict of interest, or alteration of accounting or financial reporting are practices that the external public usually rates severely. To avoid these practices, it is essential to establish internal control guidelines to help identify and avoid future risks. This way, trust is increased outwards and the company's good image is preserved.
A good practice is to establish a clear code of ethics and conduct that defines the company's objectives and principles. It is also advisable to conduct audits and establish a complaints channel so that any irregular event in the internal processes can be reported.
2. Questionable relationships
Organizations can find their image affected by having relationships with companies or individuals involved in criminal acts. It is therefore essential to analyze the profile of the companies or individuals with whom you are going to establish any type of relationship, whether as suppliers, customers or associated companies.
Bear the following guidelines in mind when doing so:
- Examine the company's processes.
- Require the documents that are necessary to know the type of activity carried out by the entity or person.
- Request information that allows you to know who the company shareholders are and their source of wealth.
- Finally, check the data provided and report any irregular event to the competent authority.
3. Poor quality of products or services
Receiving continuous complaints about the quality or safety of the product or service you offer can lead to deterioration in your brand image.
Quality control allows the identification of areas and processes that are prone to risk situations so that they can be intervened in time.
4. Lack of ethics and social responsibility
Non-compliance with regulations or incurring in practices considered unethical damage people's perception of the brand.
In this sense, it is important to take measures to ensure compliance with the labor rights of your employees or to prevent practices that threaten the environment.
This point is also related to the previous one, because through quality control you ensure that your company is complying with health, hygiene and safety standards, and that it protects the personal information of its customers and suppliers.
To learn how to manage this and any other type of risk, click below and download our free introductory risk management guide.