Businesses are becoming increasingly vulnerable to reputational risk, with 70% of businesses having experienced an event that has proposed a threat to its reputation, according to the fifth annual Global Risk Landscape report from accountancy and business advisory firm BDO LLP.
BDO’s survey of 500 C-suite executives across EMEA, Europe, the Middle East, Africa, Asia-Pacific and the Americas shows companies are alert to the dangers, with 25% saying shareholder price is a primary consequence of reputational damage, and a quarter also believing customers will take their custom elsewhere. Family run business and manufacturers felt the highest reputational risk.
Despite the threat, it is clear that too many companies remain reactive in their approach, with less than half (45%) of companies believing their crisis strategy is proactive, with over a third (35%) considering themselves to be reactive when it comes to reputational issues.
Trying to demonstrate corporate integrity while acting without values is an issue that can touch even reputable companies. BDO’s survey revealed the scale of so-called ‘integrity washing’ the act of businesses worrying more about the perception of integrity than the practice. A significant 87% of executives believe their organisation is culpable and almost half (49%) agreed with the statement: “Completely, so long as we are perceived to have integrity we do not prioritise putting it into practice.”
Nigel Burbidge, Global Chair, Risk Advisory Services at accountancy and business advisory firm BDO LLP, says:
“Clearly integrity is vital, with 99 per cent of respondents agreed on that. Being trusted confers extraordinary advantages to a business and secures customer loyalty. Customers flock to brands they believe in and that sense of integrity allows the company to outperform rivals.
“However, we found deep disagreement on who is responsible for transparency. One in three companies admits to being “reactive” on reputation: not the best strategy. And a worrying 87% say their company may be guilty of integrity washing. Clearly there is work to do.
“Integrity should be woven into the fabric of the company. Everyone must share the same ethos.”
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