Rethinking Reputational Risk —— How to Manage the Risks that can Ruin Your Business, Your Reputation and You

It seems clear that it is very easy to damage your company’s reputation, often through inadvertent activities or just a lack of care, yet far too many do exactly that! A book that guides you through managing and mitigating this risk is surely a good thing, if you think about it. Now, the authors have done a good job in corralling their thoughts, underlining the importance of reputation and managing it. This is not a “do-it-yourself PR guide” although you stand to gain a fair few good tips. Instead it looks at maintaining the status quo and getting you to think about things that can possibly ruin your company’s “good” name. Mixing practical advice with real-world case studies, you really get an expert-level look at a very important subject. Of course, even the biggest and best companies can drop the ball, often through unexpected or hidden factors, so surely it is better to learn from the mistakes of others, rather than be a public guinea pig yourself? Some of the potential risk can be managed or mitigated, but you can never rule it out entirely. An innocent (or not-so-innocent) spark may be just enough to create a powerful explosion. Whilst the book is great and useful throughout, perhaps the most helpful part could be the help to develop a practical, risk-management based approach to a company’s reputation, elevating it far beyond a mere checklist and rules-heavy approach. A range of core principles, built around a practical and manageable structure, should provide a useful, challenging and actionable method to keep your company’s reputation and the risks that it could face, in the foreground. If there is any criticism, perhaps the book makes the process look easier than it really is. There is no room for complacency and you do not want to drop your guard. Keep this book close at hand, digest intensely and ensure that colleagues are similarly focussing on the same matters. It could be one of the more important books that you consider, since the consequences for getting it wrong can be extremely far reaching and even terminal in some cases. A highly recommended book. It is very complex and detailed, even overwhelming at times, but an essential, focussed and engaging book nonetheless.

Hardly a week goes by – and certainly never a month – without our being forcibly reminded of the importance of corporate and personal reputations and of the often-uncontrollable chain of circumstances that can damage those reputations, sometimes irreparably. Since this book was published in early 2017, for example, United Airlines have stumbled into a reputational crisis by mishandling the (admittedly surprising) fact that one of their passengers was dragged bleeding and apparently unconscious from one of their planes by airport security staff for refusing to leave the plane after he had been randomly selected by computer as the sucker who was obliged to make room for airline staff on an ‘overbooked’ flight; and the chief executive of Barclays Bank has had his bonus cut and is facing investigation by regulators after apparently starting a witch hunt to uncover the identity of an internal whistle blower – thereby giving the impression that he is not entirely supportive of the whole concept of whistle blowing. The rights and wrongs of both cases are not the issue: the book reminds us that any corporation’s or individual’s public image is remarkably fragile and that, as the authors say, ‘reputational damage … can destroy solid, reputable organisations and end leaders’ careers.’ Who would have thought, after all, that the car manufacturer, Volkswagen (a solid and reputable corporation in that uniquely Germanic way), would run into a reputational crisis about illegal ‘defeat’ software hidden in its exhaust systems, designed to beat democratically imposed legislation to limit levels of toxins in exhaust fumes? Volkswagen’s CEO, Martin Winterkorn, was forced to resign, saying that he was “not aware of any wrongdoing on his part”; that the whole company was “shocked”; and that the trust of VW customers “was and would continue to be the company’s ‘most important asset’”. All three of these statements go the heart of the book’s argument: very few leaders intentionally allow bad organisational behaviours; all organisations persuade themselves that everything they do is legal, safe and sociably acceptable; reputational trust is what gives any organisation its social license to operate. The loss of this trust is horribly expensive: the authors note that major corporations tend to lose between 30 and 40 percent of their share valuation in the wake of a major reputational crisis (VW lost 40% of its valuation after ‘dieselgate’). The bad news is that the growth of social media has made the potential for stumbling into a major reputational disaster much greater: an issue that might have taken weeks or months to emerge in the pre-internet age, and then have fallen relatively quickly off the public’s radar, can now ‘go viral’ in a day (witness the United Airlines passenger being dragged apparently unconscious off the plane etc. etc. – don’t tell me you haven’t seen it). Once an event has gone viral, it tends to stay viral. Expect the news media to re-run the footage of our unconscious and bleeding United Airlines’ passenger every time the company features in the news for some time to come. If you want to know more about the Volkswagen exhaust scandal and others you will find it here, in hair-raising but un-put-downable detail: the book gives a blow by blow account of the VW scandal, alongside equally riveting accounts of BP’s 2005 Texas City Refinery explosion and the same company’s 2010 Deepwater Horizon oil spillage; Tesco’s recent dodgy accountancy practices; insurance giant American International Group’s (AIG’s) unforeseen collapse in the lead-up to the 2007/08 financial crisis; and Barclay’s ‘Libor rigging’ scandal of the same period – along with other, equally eye-watering and knee-crossing accounts of major reputational disasters. The book is worth reading for these accounts alone – these stomach-churning narratives remind us just how deluded we can be about the safeguards that we believe we have in place to prevent disaster. Fitzsimmons and Atkins remind us of the classic ‘three lines of defence’ that most companies believe to be securely in place: line managers are aware of, deal with, and report risk; central teams report these risks on up to the CEO’s office; independent auditors and the board of directors take a view on how these risks should be dealt with. Except it doesn’t work that way. The villain of the piece is communication, or the lack thereof. As the authors painstakingly but entertainingly explore, it is a nonsense to imagine that risks are clearly identified and neatly and tidily relayed up some mythical chain of command. Some risks are seen as ‘normal’ and are not reported; people report other risks, but their managers don’t really hear what they are being told, or they underestimate or fail to understand the level of risk involved. Some managers effectively deter the reporting of bad news – the book references a piece by the Financial Times reporting that, under Volkswagen’s Winterkorn, ‘decision-making … was highly centralised and more junior managers were frightened to speak their mind.’ After the Fukushima nuclear plant disaster in 2011, the official report bravely noted Japan’s ingrained cultural tendency to ‘reflexive obedience; our reluctance to question authority; our devotion to “sticking to the programme”; our groupism; and our insularity.” We are all guilty of these things. Anyone within an organisation is ‘captured’, to a greater or lesser extent, by the culture of that organisation – and the culture always assumes that everything is well and that no aspect of organisational behaviour is, in fact, inherently risky. It is surprisingly hard to ‘step outside’ our organisational cultures enough to see things clearly and objectively. The authors detail the many sources of potentially risky organisational behaviour: culture and its accompanying ‘group-think’; communication in all its forms; incentives which can unwittingly drive risky behaviours; leader and board behaviour; strategy; complexity (the report into the 1979 accident at the US Three Mile Island nuclear generating station noted memorably that ‘complex systems fail in complex ways’). The authors also give us, chapter by chapter, ‘Questions to Mull’ and a final invaluable ‘how to’ chapter on running an effective reputational risk management system. If you only have time to read one business book this year, read this one. If you are a chief executive, give a copy to every member of your senior management team and to every member of the board (they will be grateful, and will enjoy the read). Doing this could help you to avoid a reputational crisis in the first place, or to avoid the most damaging repercussions of a crisis that jumps up and hits you unexpectedly in the face (every reputational crisis is unexpected). The first alternative is greatly more desirable. Be prepared; read this book.

An excellent read for all levels of management. While preservation of a hard earned reputation may be the primary goal of the authors much of the book is focused on establishing sound business cultures. It is clear that good preparation is really the key to protecting reputations. As with all risk management ample thought must be given before disaster strikes as to exactly what could go wrong and how best to deal with it if it does. The book raises many risks and issues encountered in business, supported by excellent case studies, that are very easily missed by management and boards within a company who might otherwise, all too easily, slip into well established thought patterns and perspectives. The book will help you begin to think about everyday matters relating to your company’s operations from a new angle and possibly with surprising new insight. A good book to read while travelling to and from work.

This is exactly what I was hoping for. For such a potentially complex area it's a really easy and fascinating read (even for those not well-versed in Risk terminology). Along with Syed's "Black Box Thinking", I'd say this is a really important book and should be read and re-read regularly by executives across industry.

A thought provoking publication covering a wide range of concepts and cases. A critical read for Executives, Boards, Regulators and Professionals as it highlights key areas where consideration and care are crucial. In today's rapidly changing world it is imperative that implications of potential and past climacteric crises are taken into account in principal decision making processes. Rethinking Reputational Risk performs a sterling operation of relaying the key messages relating to Reputational Risk, reflected and validated through live case studies, in a clear and succinct manner.

The authors offer a useful combination of theory, real-life cases and thought-provoking, highly-relevant questions for risk managers, executive management and board members. One of the best risk management books I have ever read.

This was a bit of a slog to read. The authors appear experienced and knowledgeable, but this is not a book about reputational risk, it’s about a variety of Other types of risks stemming from boards, leadership and culture in large corporate environments.

It seems clear that it is very easy to damage your company’s reputation, often through inadvertent activities or just a lack of care, yet far too many do exactly that! A book that guides you through managing and mitigating this risk is surely a good thing, if you think about it. Now, the authors have done a good job in corralling their thoughts, underlining the importance of reputation and managing it. This is not a “do-it-yourself PR guide” although you stand to gain a fair few good tips. Instead it looks at maintaining the status quo and getting you to think about things that can possibly ruin your company’s “good” name. Mixing practical advice with real-world case studies, you really get an expert-level look at a very important subject. Of course, even the biggest and best companies can drop the ball, often through unexpected or hidden factors, so surely it is better to learn from the mistakes of others, rather than be a public guinea pig yourself? Some of the potential risk can be managed or mitigated, but you can never rule it out entirely. An innocent (or not-so-innocent) spark may be just enough to create a powerful explosion. Whilst the book is great and useful throughout, perhaps the most helpful part could be the help to develop a practical, risk-management based approach to a company’s reputation, elevating it far beyond a mere checklist and rules-heavy approach. A range of core principles, built around a practical and manageable structure, should provide a useful, challenging and actionable method to keep your company’s reputation and the risks that it could face, in the foreground. If there is any criticism, perhaps the book makes the process look easier than it really is. There is no room for complacency and you do not want to drop your guard. Keep this book close at hand, digest intensely and ensure that colleagues are similarly focussing on the same matters. It could be one of the more important books that you consider, since the consequences for getting it wrong can be extremely far reaching and even terminal in some cases. A highly recommended book. It is very complex and detailed, even overwhelming at times, but an essential, focussed and engaging book nonetheless.

Hardly a week goes by – and certainly never a month – without our being forcibly reminded of the importance of corporate and personal reputations and of the often-uncontrollable chain of circumstances that can damage those reputations, sometimes irreparably. Since this book was published in early 2017, for example, United Airlines have stumbled into a reputational crisis by mishandling the (admittedly surprising) fact that one of their passengers was dragged bleeding and apparently unconscious from one of their planes by airport security staff for refusing to leave the plane after he had been randomly selected by computer as the sucker who was obliged to make room for airline staff on an ‘overbooked’ flight; and the chief executive of Barclays Bank has had his bonus cut and is facing investigation by regulators after apparently starting a witch hunt to uncover the identity of an internal whistle blower – thereby giving the impression that he is not entirely supportive of the whole concept of whistle blowing. The rights and wrongs of both cases are not the issue: the book reminds us that any corporation’s or individual’s public image is remarkably fragile and that, as the authors say, ‘reputational damage … can destroy solid, reputable organisations and end leaders’ careers.’ Who would have thought, after all, that the car manufacturer, Volkswagen (a solid and reputable corporation in that uniquely Germanic way), would run into a reputational crisis about illegal ‘defeat’ software hidden in its exhaust systems, designed to beat democratically imposed legislation to limit levels of toxins in exhaust fumes? Volkswagen’s CEO, Martin Winterkorn, was forced to resign, saying that he was “not aware of any wrongdoing on his part”; that the whole company was “shocked”; and that the trust of VW customers “was and would continue to be the company’s ‘most important asset’”. All three of these statements go the heart of the book’s argument: very few leaders intentionally allow bad organisational behaviours; all organisations persuade themselves that everything they do is legal, safe and sociably acceptable; reputational trust is what gives any organisation its social license to operate. The loss of this trust is horribly expensive: the authors note that major corporations tend to lose between 30 and 40 percent of their share valuation in the wake of a major reputational crisis (VW lost 40% of its valuation after ‘dieselgate’). The bad news is that the growth of social media has made the potential for stumbling into a major reputational disaster much greater: an issue that might have taken weeks or months to emerge in the pre-internet age, and then have fallen relatively quickly off the public’s radar, can now ‘go viral’ in a day (witness the United Airlines passenger being dragged apparently unconscious off the plane etc. etc. – don’t tell me you haven’t seen it). Once an event has gone viral, it tends to stay viral. Expect the news media to re-run the footage of our unconscious and bleeding United Airlines’ passenger every time the company features in the news for some time to come. If you want to know more about the Volkswagen exhaust scandal and others you will find it here, in hair-raising but un-put-downable detail: the book gives a blow by blow account of the VW scandal, alongside equally riveting accounts of BP’s 2005 Texas City Refinery explosion and the same company’s 2010 Deepwater Horizon oil spillage; Tesco’s recent dodgy accountancy practices; insurance giant American International Group’s (AIG’s) unforeseen collapse in the lead-up to the 2007/08 financial crisis; and Barclay’s ‘Libor rigging’ scandal of the same period – along with other, equally eye-watering and knee-crossing accounts of major reputational disasters. The book is worth reading for these accounts alone – these stomach-churning narratives remind us just how deluded we can be about the safeguards that we believe we have in place to prevent disaster. Fitzsimmons and Atkins remind us of the classic ‘three lines of defence’ that most companies believe to be securely in place: line managers are aware of, deal with, and report risk; central teams report these risks on up to the CEO’s office; independent auditors and the board of directors take a view on how these risks should be dealt with. Except it doesn’t work that way. The villain of the piece is communication, or the lack thereof. As the authors painstakingly but entertainingly explore, it is a nonsense to imagine that risks are clearly identified and neatly and tidily relayed up some mythical chain of command. Some risks are seen as ‘normal’ and are not reported; people report other risks, but their managers don’t really hear what they are being told, or they underestimate or fail to understand the level of risk involved. Some managers effectively deter the reporting of bad news – the book references a piece by the Financial Times reporting that, under Volkswagen’s Winterkorn, ‘decision-making … was highly centralised and more junior managers were frightened to speak their mind.’ After the Fukushima nuclear plant disaster in 2011, the official report bravely noted Japan’s ingrained cultural tendency to ‘reflexive obedience; our reluctance to question authority; our devotion to “sticking to the programme”; our groupism; and our insularity.” We are all guilty of these things. Anyone within an organisation is ‘captured’, to a greater or lesser extent, by the culture of that organisation – and the culture always assumes that everything is well and that no aspect of organisational behaviour is, in fact, inherently risky. It is surprisingly hard to ‘step outside’ our organisational cultures enough to see things clearly and objectively. The authors detail the many sources of potentially risky organisational behaviour: culture and its accompanying ‘group-think’; communication in all its forms; incentives which can unwittingly drive risky behaviours; leader and board behaviour; strategy; complexity (the report into the 1979 accident at the US Three Mile Island nuclear generating station noted memorably that ‘complex systems fail in complex ways’). The authors also give us, chapter by chapter, ‘Questions to Mull’ and a final invaluable ‘how to’ chapter on running an effective reputational risk management system. If you only have time to read one business book this year, read this one. If you are a chief executive, give a copy to every member of your senior management team and to every member of the board (they will be grateful, and will enjoy the read). Doing this could help you to avoid a reputational crisis in the first place, or to avoid the most damaging repercussions of a crisis that jumps up and hits you unexpectedly in the face (every reputational crisis is unexpected). The first alternative is greatly more desirable. Be prepared; read this book.

An excellent read for all levels of management. While preservation of a hard earned reputation may be the primary goal of the authors much of the book is focused on establishing sound business cultures. It is clear that good preparation is really the key to protecting reputations. As with all risk management ample thought must be given before disaster strikes as to exactly what could go wrong and how best to deal with it if it does. The book raises many risks and issues encountered in business, supported by excellent case studies, that are very easily missed by management and boards within a company who might otherwise, all too easily, slip into well established thought patterns and perspectives. The book will help you begin to think about everyday matters relating to your company’s operations from a new angle and possibly with surprising new insight. A good book to read while travelling to and from work.

This was a bit of a slog to read. The authors appear experienced and knowledgeable, but this is not a book about reputational risk, it’s about a variety of Other types of risks stemming from boards, leadership and culture in large corporate environments.