26 June 2017 by Henry Ker
Restoring trust once it has been broken or lost is a formidable task
Reputational risk and the paramount importance of public trust for an organisation has permeated discussion on a wide range of governance topics recently – from cyber risk to customer services, anti-corruption and bribery, whistleblowing, business ethics and financial reporting.
Certainly, recent negative publicity around very public incidents for companies like British Airways, United Airlines and Uber all threaten to undermine strong reputations built over many years; while, as Ibi Eso of Bridgehouse Company Secretaries explains in their article 'Plan ahead', even something simple like non-compliance and late filing at Companies House may well lead to reputational consequences.
Tom Hollobone, a Senior Director at Kroll, states in his article 'The best line of defence' that ‘reputational concern has now become the top reason third parties fail to meet an organisation’s standards’, while 51% of FTSE 350 company secretaries surveyed in the Winter 2016 FT–ICSA Boardroom Bellwether consider their exposure to reputational risk to be increasing.
Restoring reputation and trust was also the driving force behind the inquiry into the charitable sector by the House of Lords Select Committee. Baroness Pitkeathley, Chair of the Committee, explains in our interview 'Stronger charities': ‘[because of] the rather torrid time the charity sector had been going through in recent years … one of the main aims of the inquiry was to acknowledge just how good the sector is, how much good it does, how well it manages itself, and also to increase confidence in the sector.’ Restoring something once it has been broken or lost is a formidable task and as the Baroness warns, organisations should ‘[not] take trust for granted’.
Boards are beginning to acknowledge the consequences of business incidents stretch far beyond the direct costs of restoring full service or compensating stakeholders. As Ricardo Turra of Votorantim Cimentos (one of the executives interviewed as part of Kroll’s report) states: ‘Hours or days can destroy decades spent to create a great brand.’ It is better to protect the organisation through comprehensive governance and compliance programmes than to have to try picking up from the ground the pieces of a shattered reputation.
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