How to Manage Reputational Risk in Financial Institutions

By Aaron Brown

Part of Financial Risk Management For Dummies Cheat Sheet

How your organisation is perceived, what its reputation is, is a key component in your financial risk management strategy. The two easiest ways to get a bad reputation are to care only about reputation and to care nothing about reputation. Earning a good reputation requires a careful mix of considering the feelings of others and being willing to stand up against the crowd when necessary.

An embarrassing scandal in a financial entity often leads to regulatory crackdowns, loss of business, lawsuits, employee losses and other bad outcomes. On the other end of the scale is an organisation or people connected with it who are seen to do something admirable – anything from employees pitching in to fund and build a community playground to the business coming up with an innovative and attractive new product.