Reputational Risk Management - A Practical Overview

4 min read
Jan 5, 2023 1:16:09 PM

Reputational risk management is a critical element of a company's risk management strategy. It involves understanding, monitoring, and managing the risks associated with an organization's reputation so that the organization can maintain its social license to operate. 


This comprehensive overview will provide you with an insight into the strategic aspects of reputational risk management.


what is reputation risk management

Understand the Basics of Reputational Risk Management.


Effective reputational risk management begins with a strong understanding of the concept of reputational risk itself. Put simply, it’s the risk of harm to an organization's reputation caused by actual or threatened activities that could impact its stakeholders in some way. It can affect customer trust in the brand, its relationship with stakeholders, and its bottom-line performance.


It's essential that organizations understand the full scope of their reputational risks, and their potential severity, before developing an effective response strategy.


Develop a Clear Reputational Risk Management Strategy. 


After assessing the full scope of a company’s reputational risks, it’s time to devise a robust strategy. This should be focused on how an organization will identify, monitor, and manage its reputational risks. It should also specify how potential incidents are to be managed and communicated in order to preserve reputation and trust. 


An effective risk management strategy will account for both internal and external factors, ensuring that all of the organization’s stakeholders understand the importance of addressing reputational risk issues in a timely manner.


  • Use social media listening tools
  • Investing in public relations
  • Emphasis employee training 
  • Have a consistent brand message


Analyze Potential Reputational Risks and Threats.


To create an effective reputational risk management strategy, organizations must analyze potential risks and threats. 


This includes assessing the organization’s internal surroundings such as: 


  • structure
  • employee morale
  • corporate culture
  • processes
  • procedures


External factors include: 


  • customer scrutiny
  • public opinion
  • government regulations
  • competition


Additionally, it is important to understand how sensitive the organization’s reputation may be in regard to certain topics. Companies should then prioritize the risks that represent a threat of significant harm to their reputation and involve stakeholders in developing an effective response plan.


reputation risk factors

Companies can use SWOT analysis to determine risk factors and react accordingly.




Home Depot faces a fast-growing competitor, especially in eCommerce. The company must change its strategies to combat this. Home Depot could lose its profits due to the Covid-19 pandemic, and lower online sales.


The company saw its revenue drop due to the decline in the prices of raw materials such as lumber (Timber). This indicates that the company is extremely vulnerable to changes in its environment, such as price drops in raw materials.


Identify Measures to Mitigate Risk 


Once risks have been prioritized and the potential consequences and impacts determined, risk management measures should be implemented to mitigate the risks. 


A series of short-term and long-term measures could be adopted such as recognizing areas of weakness, communicating any reputational issues quickly, finding quick resolutions to challenging situations, engaging in proactive public relations activities, and using crisis tactics procedures if needed. 


These measures should also incorporate internal efforts such as education and training opportunities, compliance audits, and better employee engagement; as well as external resources such as social media monitoring tools or public opinion surveys.




Southwest used social media to quickly respond and manage customers' travel issues. The team had a specially-designed social media listening center that was staffed with 31 people who monitored thousands of tweets daily and responded to them.


How did customer feedback help them improve their customer service?


To determine if Southwest Airlines customers needed assistance, they carefully reviewed tweets and other social media posts that mentioned Southwest Airlines.


This feedback enabled the team to provide real-time customer service such as tracking lost luggage and rebooking missed connections. Southwest was able to respond to customers via Twitter quicker than any other airline using this system.


Monitor Your Organization's Risk Profile Regularly


Risk profiling should be a continual and iterative process that involves regularly identifying, assessing, mitigating, and managing organizational risk. Organizations must monitor their own internal risk profile as well as external risks. 


They should monitor the latest legal changes, industry trends, customer feedback, potential competitors, reputational damage, and other factors to get a better view of the company’s overall risk landscape. 


This information can then be used to inform business decisions and protect the organization in case of unexpected events.




Within minutes, @Teamnike responds to customers who mention Nike's main Twitter handle.


This helps to separate the main marketing channel and all the support and complaints discussions, but it also shows how committed the brand is to solving customers' problems.


They never lose their patience, even though they are constantly receiving support requests.


Companies can learn the importance of a social media listening strategy by analyzing the time @Teamnike takes to help customers.


Managing Reputational Risk With Help


Managing reputational risk is essential as your business grows. It can also be a very overwhelming process, requiring a team to focus on different aspects. Outsourcing this process to an experienced reputation management company is a great way to reduce the cost of training new employees, management conflict, and additional expenses. 


NewReputation has helped many companies repair, protect, and develop a strong online reputation. Reputation risk management should be considered a top priority for your business to tackle before it's too late. It is easier to be proactive in managing your company's reputation than to have to fix it after it is damaged. 


To receive a free risk management proposal, contact NewReputation today.

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