Corporate Reputation Review
Managing Reputational Risk: Insights from an
Corporate Reputation Review,
Vol. 18, No. 4, pp. 248–260
© 2015 Macmillan Publishers Ltd.,
1363-3589
Volume 18 Number 4
European Survey
Barbara Gaudenzi and Ilenia Confente
Business Administration, University of Verona, Verona, Italy
E-mails: Barbara.gaudenzi@univr.it; ilenia.confente@univr.it
Martin Christopher
Cranfield School of Management, Cranfield University, Cranfield, UK
E-mail: m.g.christopher@cranfield.ac.uk
ABSTRACT
It could be argued that the management of
reputational risk should be a key business priority.
Yet despite recognition in previous studies that the
risk related to reputation is critical, concrete repu-
tational risk management approaches remain
poorly developed. This paper presents a theoretical
framework with the key steps for companies to
become more aware of reputational risk and to
protect themselves from it. In addition, the authors
describe companies’ perceptions of risks and repu-
tation issues. A questionnaire-based survey
focused on risks and reputation issues was con-
ducted among a sample of experts in risk man-
agement working for international manufacturing
and service firms. Results show that while repu-
tational risk is considered to be critical, in practice
there is no particular attention assigned to specific
risk sources that might affect reputation.
Corporate Reputation Review (2015) 18,
248–260. doi:10.1057/crr.2015.16
KEYWORDS: corporate reputation; managers’
perception; reputational risk; reputation management;
risk sources
www.palgrave-journals.com/crr/
INTRODUCTION
Several studies have examined how a strong
corporate reputation improves the perfor-
mance of an organization, whether in finan-
cial terms (Roberts and Dowling, 2002;
Eberl and Schwaiger, 2005), in its operations
or at the strategic level (Brammer and
Pavelin, 2006; Christopher and Gaudenzi,
2009). In this latter sense, corporate reputa-
tion is a strategic asset (Rayner, 2003), and
any damage to it could create a critical threat
(Atkins et al., 2006). In the past decade, sev-
eral well-established companies have faced
such crises, such as British Petroleum’s
involvement in the oil spill in the Gulf of
Mexico, Toyota’s loss of market share after a
product recall and Enron’s financial ethics
scandal (Louisot and Rayner, 2011). Even
Johnson & Johnson, which saved its brand
reputation after the Tylenol threat in the
1980s, spent much of 2011 defending itself
against a boycott of its baby shampoo by a
child advocacy group that alleged it used
dangerous chemicals that might cause cancer
(Crisis Management Report, 2011). Health
care and Financial sectors continue to suffer

from substantial exposure to their reputation
and recent crises demonstrate how a single
corporate crisis can affect the entire sector, as
well as the wider society and economy.
These domino effects also spread from pro-
duction/distribution to entire product cate-
gories, and social media are amplifying and
accelerating these reactions worldwide.
These effects on reputation are more and
more important for those organizations con-
sidered as ‘top companies’, where the value
related to intangible assets is quite critical and
should be carefully protected (Larkin, 2003).
The Reputation Institute (2012) ranked the
management of reputational risk (eg Reputa-
tion issues management) as one of the top
reputation priorities in 2012. Yet despite
recognition in previous studies and business
surveys that risk related to reputation is critical
(Black et al., 2000; Eccles et al., 2007; Greyser,
2009; Commercial Risk Europe, 2013), con-
crete reputational risk management approaches
remain poorly undertaken and developed
(Louisot and Rayner, 2011).
From an academic point of view, there
has been a call for more research combining
the fields of reputation management, risk
assessment and knowledge management
(Neef, 2005).
Moving from these considerations, our
study aims at taking some preliminary steps in
building a process for increasing awareness
about reputational risk providing companies
with a structured approach for its management.
In detail, the objectives of the paper are:
● to provide a theoretical framework with
the key steps for companies to become
more aware of reputational risk and to
protect themselves from it
● to analyse companies’ perceptions of risks
and reputation issues. Specifically:
○ to analyse how risk is defined and
perceived by companies, and whether
they adopt risk assessment approaches
○ to analyse companies’ perceptions of
reputational risk related to that of
© 2015 Macmillan Publishers Ltd. 1363-3589
Gaudenzi, Confente and Christopher
commonly managed risk categories,
including strategic, operational, sup-
ply chain and financial risk
○ to recognize companies’ perceptions
about the main sources of reputa-
tional risk
The paper is structured as follows: a sys-
tematic literature review will describe the
topics of corporate reputation and reputa-
tional risk, followed by the definition of the
key steps that could enable practitioners to
increase their awareness and to protect the
company from reputational risk. Then,
the ‘Research method’ section will discuss
the data collection phase and the data analy-
sis. Finally, the paper will illustrate the main
results, the gaps in the research and possible
future directions for this stream of research.
Building a Theoretical Framework
Through a Systematic Literature Review
Considering the crossroads between the main
literature streams in corporate reputation and
risk management, we here suggest four steps
that companies should consider for protecting
themselves from reputational risk (Figure 1):
(A) to address the importance of corporate reputation
as a resource at risk; (B) to define what is risk and
how to assess it; (C) to compare reputational risk to
other risk categories; and (D) to identify the main
risk sources that can affect reputation.
To address the importance of corporate
reputation as a resource at risk
Corporate reputation is one of a firm’s most
important strategic resources (Hall, 1992, 1993;
Flanagan and O’ Shaughnessy, 2005; Ponzi
et al., 2011) as it offers a valuable source of
competitive advantage that generates stake-
holder support (Rindova et al., 2005; Fombrun
and Pan, 2006). Reputation creates a reservoir
of goodwill that can protect organizations from
downturns (Roberts and Dowling, 2002;
Fombrun and van Riel, 2004), though there is
Vol. 18, 4, 248–260 Corporate Reputation Review 249
 Managing Reputational Risk

B. Defining what is risk and

how to assess it:

a) Potential loss in financial

flows
C. Comparing
b) Potential under reputational risk to other
performance risk categories:
A. Addressing c) Events with uncertain but
the importance negative impacts
of Strategic risks

Reputational risks
Corporate
Reputation Operational risks
as a resource at
risk D. Identifying the main risk
sources that can affect Financial risks
reputation:
Supply chain risks
a) Macro environment drivers
b) Operations drivers
c) Finance drivers
d) Other drivers

Figure 1: A theoretical framework for including reputation issues within risk management

a stark imbalance between the extended time it
takes to build a reputation and the brief time it
takes to destroy it (Helm, 2005; Taewon and
Amine, 2007).
Several definitions of corporate reputation
exist in the literature (Wartick, 1992;
Fombrun, 1996; Waddock, 2000; Sandberg,
2002). In a review of more than 60 studies,
Rindova et al. (2005) recognize that scholars
generally consider reputation to be the result of
external actors’ assessments of particular attri-
butes or collective knowledge about a firm.
Their synthesis of a vast range of definitions
indicates that organizational reputation com-
prises two main dimensions: stakeholders’ per-
ceptions of the quality of specific attributes and
the degree to which the firm earns large-scale,
collective recognition (Einwiller et al., 2010).
Various authors have suggested that reputa-
tion is an economic resource because it influ-
ences the profitability of companies (Fombrun,
2001; Fombrun and van Riel, 2004; Roberts
and Dowling, 2002; Shamsie, 2003) and recent
studies have proposed different corporate
reputation measures (Fombrun and Rindova,
2000; Black et al., 2000; Griffin, 2002; Luo,
2002; Schwaiger, 2004; Helm, 2005;Walsh
and Beatty, 2007).
However, its vulnerability seems less
intensively explored and documented
(Larkin, 2003; Rayner, 2003; Neef, 2005;
Atkins et al., 2006; Reputation Institute,
2012). In particular, Rayner (2003) takes the
first accountancy approach to reputation risk
management, considering reputation as a
strategic resource at risk.
Managers need to define the value of the
‘assets at risk’ (in this case, the value of repu-
tation) before they can choose proper actions
or allocate adequate resources to manage that
risk. In addition, they should identify
the sources of reputation formally, in terms of
the value to stakeholders and the elements of
the company’s key competences (Carol,
2008; Louisot and Rayner, 2011).
To define what is risk and how to assess it
To prevent or quickly recover from reputa-
tional risk, companies should include it
within their risk management agenda.
To this end, a key requirement is the selection

250 Corporate Reputation Review Vol. 18, 4, 248–260 © 2015 Macmillan Publishers Ltd. 1363-3589

of ad-hoc tools for evaluating and managing
critical risks that impact onto strategic
assets, including reputation (AIRMIC,
ALARM, IRM, 2010; Eccles et al., 2007;
Delgado-García et al., 2013).
First of all, managers should evaluate
which risk definition is already (or should be)
adopted in the organization’s managerial
procedures.
Risk can be defined and assessed in different
ways, such as a potential loss in financial flows
(ERM, 2004), as potential underperformance
in business processes (March and Shapira,
1987) or as a negative event that cannot be
measured under uncertainty (Emblemsvåg and
Kjølstad, 2002; ERM, 2004). The adoption of
a particular risk definition could influence the
choice of specific risk assessment (identification
and measurement) approaches (White, 1995).
One definition of risk is ‘an unfavourable
event, capable of generating a negative devia-
tion from an expected situation, such as a
smaller gain or a greater loss than expected’
(Rowe, 1977). This definition is particularly
appropriate for those risks – for example
reputational risk – that can have negative con-
sequences in different business areas (Borghesi
and Gaudenzi, 2012).
Moreover, managers should develop and
undertake a structured assessment of their risks,
consisting of three phases: identification, ana-
lysis and evaluation of risks (ISO 31000, 2009).
This multi-level process requires the essential
capability to integrate different qualitative and
quantitative techniques. As literature and
international risk management guidelines sug-
gest, qualitative methods appear to be pre-
valent than quantitative methods (Aon Risk
Solutions, 2013; Ellis et al., 2010; Emblemsvåg,
2010). For this reason, we included in our sur-
vey two main measurement methods that are:
qualitative methods and statistical approaches.
The aim of the research is to develop a
framework for the construiction of risk pro-
files (including reputational risk) and thereby
help management to take appropriate actions
(Dickinson, 2004; Emblemsvåg, 2010). The
© 2015 Macmillan Publishers Ltd. 1363-3589
Gaudenzi, Confente and Christopher
results of the risk identification, analysis and
evaluation steps also enable the organization
to prioritize strategies, and to allocate neces-
sary resources for risk prevention and/or risk
mitigation actions.
Regarding reputational risk, Eccles et al.
(2007) suggested that this process should
entail a classification of potential internal and
external sources of risk, along with structured
phases of assessment (identification, analysis
and evaluation) and treatment (mitigation
and prevention).
Moreover, Power et al. (2009) highlight
that many companies consider reputation as an
asset to be protected, but fail to implement
appropriate assessment and control techniques.
To compare reputational risk to other risk
categories
Firms risks are frequently classified into cate-
gories such as: strategic risk, financial risk,
operational risk and supply chain risk.
An effective reputational risk management
programme requires that strategic, financial,
operational and supply chain perspectives are
all systematically evaluated in terms of risk
exposure and mitigation actions.
For example, from a strategic perspective,
managers should observe if and how risk may
damage key material and immaterial assets,
hinder the pursuit of strategic objectives or
affect the firm’s capability to guarantee to
stakeholders a tolerable level of overall risk,
in conformance with their general risk appe-
tite (Miller and Bromiley, 1990). From a
financial perspective, managers should analyse
the implications of risk for business liquidity
and credit capacity (Eberl and Schwaiger,
2005; Jorion, 2007). From a operational per-
spective managers should investigate how a
risk might hinder the pursuit of effectiveness
and efficiency for focal activities (Cohen and
Kunreuther, 2007). Finally, from a supply
chain perspective managers should evaluate
if and how a risk might keep them from
achieving effectiveness and efficiency
Vol. 18, 4, 248–260 Corporate Reputation Review 251
 Managing Reputational Risk
objectives at the network level (Sodhi et al.,
2012). Operational and supply chain perspec-
tives are particularly critical with regard to
corporate reputational risk, because knowl-
edge sharing is often more difficult in the
network of suppliers and customers (Arino
et al., 2001; Tanriverdi, 2005), and reputation
has a direct influence on network relationship
stability (Connel and Voola, 2007).
Analysing and monitoring any dependen-
cies across all risk categories is necessary in
order to adopt appropriate risk management
approaches. Both scholars (Hendricks and
Singhal, 2003; Christopher and Gaudenzi,
2009; Greyser, 2009) and practitioners
(AIRMIC, ALARM, IRM, 2010; ERM,
2004) have observed the growing inter-
connections of various risks, initially mani-
fested within specific corporate areas but then
with spreading consequences to other various
aspects of the internal and external manage-
ment of the business. The analysis of such
interconnections is complex, but the benefits
can be considerable.
To identify the main risk sources that can
affect reputation
Risks may be generated as a result of risk ‘dri-
vers’ or risk ‘sources’ that are either internal or
external to the company (Miller and Bromiley,
1990; Jüttner et al., 2003). The capability to
identify all of these drivers allows the assess-
ment of different risks and the development of
a risk management plan for the company.
The categorization of risk sources/risk dri-
vers still remains fragmented (Rao and
Goldsby, 2009). For the purpose of this
research, we categorized the most salient risk
drivers into four main groups: macro-envir-
onment risk drivers, operations risk drivers,
finance risk drivers, supply chain risk drivers
and other drivers. Macro-environment risk
drivers are external factors that are most diffi-
cult to predict and include political instability,
regulations and market/demand variability
(Yaprak and Sheldon, 1984). Operations risk
252 Corporate Reputation Review Vol. 18, 4, 248–260
drivers are related to the execution of com-
pany’s business functions. It is a broad category
that includes, for instance, IT failures, piracy
and thefts, product shortages, safety and
security, inventory and supplier dependence
(Wagner and Bode, 2008). Finance risk dri-
vers are related to the generation of economic
and financial value and include credit avail-
ability or cash flows, and currency fluctuation
(Miller and Bromiley, 1990). Supply chain
risk drivers are related to the structure and
vulnerability of the network in terms of actors
involved and nature of relations, and include
demand visibility, lack of integration between
supply chain and product design, the need for
process flexibility and supply shortages
(Jüttner, 2005). Finally, there are other drivers
that do not fall into any of these categories,
but they are important and may affect them;
these include natural disasters, human resource
issues and intellectual property concerns (ISO
31000, 2009).
Research Method
The exploratory study was designed to initi-
ally address the theoretical and managerial
issues raised in this research. In doing so, the
goal of the study was to understand practi-
tioners’ perception of reputational risk, ana-
lysing the priority managers assigned to this
risk and what risk sources managers perceived
as highly critical.
Sampling procedure and characteristics
We gathered data through a survey addressed
to experts in risk management working for
manufacturing and service international firms.
The goal was to involve in the survey
companies where the value of reputation is
potentially well managed, in order to focus on
the perception of risks and reputational issues.
Considering the International Corporate
Reputation Ratings (Fombrun, 2007) we
selected a sample of most reputable compa-
nies referring to the ‘Best Workplaces in
© 2015 Macmillan Publishers Ltd. 1363-3589
 Gaudenzi, Confente and Christopher

Table 1: Companies Profile (in US$) The sample consisted of risk experts in a vari-
ety of areas, such as Manufacturing & Produc-
Companies profile n Percentage tion, Health Care, Services, IT &
Telecommunication, and Construction &
Revenue Real Estate.
Up to US$10 m 4 9.09 At the same time, study participants nee-
Over US$10 m 14 31.82 ded to share several characteristics to allow
Over US$500 m 9 20.45
for comparability. For example, because we
Over US$1 bn 12 27.27
Over US$10 bn 5 11.36
relied on key informants, it was critical to
Industry select risk experts who were influential deci-
Manufacturing and production 29 66.00 sion makers involved in understanding and
Health care 2 4.50 assessing corporate risk. However, in order to
Services 8 18.20 exclude biased answers from participants,
IT and telecommunication 2 4.50 managers were not aware that the aim of the
Construction and real estate 3 6.80 research was particularly related to reputa-
tional risk. For this scope, we described to the
respondents the research’s aim in terms of an
analysis of the companies’ perception of risk.

Italy’ list in the period of 2010–2013 (www

.greatplacetowork.it, accessed in December,
2013). In this way we were able to personally
contact the respondents in Italy, in order to
directly engage them, although the compa-
nies were not Italian firms but international
and many of them multinational ones. The
focus of the survey was not at a respondent’s
level but a company level, in order to
understand the approach towards reputa-
tional risks of the firms, not just the percep-
tion of managers.
We decided to adopt a non-probability
convenience sampling technique (Cavana
et al, 2001). As highlighted by Barrat et al
(2011), convenience sampling method is
quite widely used both in qualitative and
quantitative research.
The participants were asked to fill in the
survey through a phone call, in order to
make the data set more reliable. We decided
to involve the main experts in risk manage-
ment of the companies involved.
Our final sample consisted of 44 compa-
nies in several manufacturing and service
sectors.
A description of the key characteristics
of participants is provided in Table 1.
Data collection
To ensure the content validity of our measures
(Churchill, 1979; De Vellis, 2003) we devel-
oped the definitions included in each question
through discussions held in a workshop with
ten risk experts. These managers were asked to
assist us in the validation of each definition and
were invited to identify the items that best
captured the respective dimensions for those
questions that involved multiple items.
The development of the questionnaire
required the identification of risk definitions,
risk categories, risk drivers and risk assessment
techniques. We presented risk experts with a
list of risks and risk drivers based on an
extensive review of the literature on risk
management to assess the survey for clarity
and readability.
As a result of this first step, we eliminated
some questions and we better explained
some definitions. In a second step, we sub-
mitted the remaining questions to a team of
managers and academics identified as experts
in the areas of risk management.
We were interested only in overall ratings
of the risk categories and source. It was not
the aim of this study to determine exact

© 2015 Macmillan Publishers Ltd. 1363-3589 Vol. 18, 4, 248–260 Corporate Reputation Review 253
 Managing Reputational Risk
Table 2: Risk Definition, Risk Assessment Methods and Reputational Risk Priority
Definitions of risk
A. Potential loss in financial flows
B. Potential underperformance in business
processes
C. Events with uncertain but negative impacts
probabilities for each risk and risk sources,
but rather to obtain an understanding of the
risks associated with reputation and other
organizational areas.
Three main risk definitions were identi-
fied and approved: (1) potential loss in
financial flows, (2) potential under-perfor-
mance in business processes, (3) events with
uncertain but negative impacts.
We first asked respondents to answer sev-
eral statements with respect to their role, the
business their companies were in and their
overall revenue; second participants were
invited to respond to questions related to
their perception of risk definition (three main
definitions), and risk priority (financial, stra-
tegic and operational risk), using a 5-point
rating scales (from 1 = ‘strongly disagree’ to
5 = ‘strongly agree’).
In the third part of the questionnaire, we
asked managers to evaluate the priority of
several risk sources and to indicate the risk
measurement methods they usually adopt.
Risk sources were suggested from the lit-
erature to risk experts and a total of 18 drivers
were selected and were recognized as
belonging to five macro categories. The same
Likert scale used for risk categories was
adopted for risk drivers.
Results
Owing to our relatively small sample, we ‘stay
on the safe side’ and mostly reported a com-
bination of descriptive statistics and correlation
254 Corporate Reputation Review Vol. 18, 4, 248–260
Companies Assessment methods Reputational
risk
n Qualitative Quantitative NA Mean
15 3 11 1 3
23 16 6 1 3.20
6 4 2 0 3
analyses. This is consistent with other small
samples studies (eg, De Beuckelaer and
Wagner, 2012). Moreover, the level of statis-
tical significance of the results encouraged us
to consider the findings relevant.
Managers’ risk definition and assessment
The majority of participants (n = 23) chose
the definition of risk as being a potential under
performance, which can affect the organiza-
tion’s capability to achieve its business objec-
tives. We explored the link between the risk
definition managers chose and the priority
they granted to reputational risk. Therefore,
our study highlights the existence of a com-
mon view about the definition of risk. Within
the companies which chose the definition of
risk as a ‘potential under performance’, the
majority declared to adopt a qualitative mea-
surement method (n = 16 companies).
On average, those managers who selected this
definition of risk gave a slightly higher
importance to reputational risk (mean = 3.2)
compared with those who chose the other
two definitions (mean = 3 for both).
As a consequence, the choice of a specific
risk definition or a particular assessment
method, does not impact on the priority that
managers assign to reputational risk (Table 2).
The importance of reputational risk
Managers were asked to evaluate the impor-
tance they assign to reputational risk.
© 2015 Macmillan Publishers Ltd. 1363-3589
 Gaudenzi, Confente and Christopher

Table 3: Descriptive Statistics of the Risk Categories

Risk categories Min Max Mean Median Mode

Reputational risk 1 5 3.171 3 3

Supply chain 2 4 3.366 3 3
Operational 1 4 3.268 3 3
Strategic 2 5 3.122 3 3
Financial 1 5 2.902 3 2

Note: 1 = Very Low Priority and 5 = Very High Priority

Table 4: Correlation of the Risk Categories

Risk categories 1 2 3 4 5

1. Reputational 1
2. Supply chain −0.022 1
3. Operational 0.269 0.608 1
4. Strategic −0.221 −0.096 −0.212 1
5. Financial −0.107 −0.247 −0.196 0.446 1

The average mean for this risk was 3.171
(min = 1, max = 5); in general, reputational
risk was considered more critical than strate-
gic and financial risks, but less important than
supply chain and operational risk (Table 3).
The relationship with other risk categories
In Table 4 the results from the correlation
analysis demonstrate that reputational risk is
positively correlated with operational risk,
while it is negatively correlated with the other
risk categories. Unfortunately none of these
relationships are statistically significant. The
main significant correlations are between
operational risk and supply chain risk
(r = 0.608) and between financial and strategic
risk (r = 0.446).
This result shows that the priority given to
reputational risk is not related to any of the
most common managed risks categories, so
its importance does not depend on the
importance managers give to the other con-
sidered risks.
Risk sources
Finally, we asked managers to evaluate – on a
scale from 1 to 5 – the priority for assessing
several risk sources. In the survey develop-
ment phase, managers evaluated the 18 items
suggested in the survey (see Table 5).
On average risk drivers were not seen as
being of high importance (the average mean
is less than 3, see Table 5) and did not present
a correlation with reputational risk, except
for safety and security drivers (Table 6). The
most critical risk sources were constituted by
safety and security drivers (mean = 3.92) and
IT failures (mean = 3.23), followed by supply
shortages (mean = 3.11).
Discussion and Implications
The goals of this research were (1) to analyse
companies’ perception of risk assessment
approaches; (2) to analyse companies’ approach
towards reputational risk, compared with
other risk categories; and (3) to investigate

© 2015 Macmillan Publishers Ltd. 1363-3589 Vol. 18, 4, 248–260 Corporate Reputation Review 255
 Managing Reputational Risk

Table 5: Correlations Between Risk Drivers (sources) and Reputational Risk

Risk drivers Average mean (min = 1, max = 5)

Supply chain risk drivers

Lack of integration between supply chain and product design 2.28
Need for processes flexibility 2.01
Supply shortages 3.11

Operations risk drivers

Piracy/theft 1.55
Product life cycle shortage 2.2
IT failures 3.23
Safety and security 3.92
Supplier dependence 2.89
Inventory 2.27

Finance risk drivers

Criticalities in cash flow cycle 2.78
Currency fluctuation/exchange rate risk 2.02
Credit availability 2.53

Macro-environment risk drivers

Politcal instability 2.37
Regulations 2.63
Market/demand volatility and variability 3.06
Natural disasters 2.59

Other risk drivers

HR disputes 2.21
Intellectual property 2.54

companies’ perceptions about the main sources
of reputational risk.
On the basis of our study, it seems that
reputable companies actively seek to consider
reputational risk in their risk management
agenda. The European companies of our
sample increasingly perceive the need to pro-
tect the value of reputation against the most
critical threats and tend to identify the reputa-
tion sources, which must be directly protected.
The risk linked to reputation is perceived as a
priority for managers, as it has the same
importance as other commonly managed risks,
such as strategic risks, operational risks, finan-
cial risks and supply chain risks.
In addition, we found that the importance
managers assign to reputational risk does not
depend on the companies’ risk culture or
approaches. For example, companies can
adopt different risk definitions, like ‘potential
loss in financial flows’, or ‘negative event that
cannot be measured’, or ‘ potential under-
performance in business processes’ and in all
the cases reputational risk seems to find a top
position in the managers’ agenda.
On the one hand, companies’ risk
approaches influence the adoption of specific
methods for identifying, measuring and
evaluating risks, including reputational risk.
For instance, risk managers, who considered

256 Corporate Reputation Review Vol. 18, 4, 248–260 © 2015 Macmillan Publishers Ltd. 1363-3589
 Gaudenzi, Confente and Christopher

Table 6: Correlations Between Risk Drivers A potential consequence could be a lack of

(sources) and Reputational Risk capability in promptly addressing the potential
impacts of different risk sources on reputation.
Risk drivers Reputational This can lead in practice to a lack of capability
risk
in managing reputation issues (Reputation
Institute, 2012).
1. Lack of integration −0.168
While the literature stresses the cross
2. Need for processes flexibility 0.109
3. Supply shortages 0.049
functional nature of reputation, this seems
4. Piracy/theft 0.091 not to be confirmed by our findings.
5. Product life cycle shortage 0.056 It would be interesting to further explore the
6. IT failures −0.238 appropriate assignment of responsibility for
7. Safety and security 0.321 reputational risk (risk ownership) in order to
8. Supplier dependence −0.066 identify the managers who have the most
9. Inventory −0.150 influence over reputation management
10. Criticalities in cash flow −0.142 and protection. This aspect has been descri-
cycle bed only obliquely in prior literature (Eberl
11. Currency fluctuation −0.291 and Schwaiger, 2005).
12. Credit availability −0.268
Finally, we analysed the main risk sources
13. Political instability −0.091
that managers recognized as critical, which
14. Regulations 0.170
15. Market/demand volatility 0.054
are: macro environment, operations, finance
16. Natural disasters −0.258 and supply chain risk drivers. Overall,
17. HR disputes 0.005 managers did not assign very high priority to
18. Intellectual property −0.085 the risk drivers. It means that single risk
sources are generally underestimated, even if
the entire risk management process is care-
fully managed. Looking at the specific rela-
risk as a ‘potential under-performance’, were tionship between risk drivers and
more likely to choose a qualitative risk reputational risk, only safety and security
assessment approach. On the other hand, risk were recognized as a significant risk sources
managers who defined risk as a ‘potential loss linked to reputation. This is in line with the
in financial flows’, chose quantitative assess- literature where safety and security issues
ment methods. represent one of the major causes of reputa-
The implication is that, reputational risk tion crises (O’Rourke, 2001). However, the
can be included within different risk man- lack of consideration of other risk drivers
agement frameworks or risk approaches. demonstrates how reputational risk is not
However, (reputational) risk assessment concretely assessed, even if perceived to be
methods could vary depending on the com- strategic.
panies’ risk culture. This result enriches pre- Finally, although many companies con-
vious studies (March and Shapira, 1987; sider reputation as a key asset to be protected,
White, 1995; Jafari et al., 2011). they do not adopt specific techniques for
Second, we found that managers considered identifying and measuring reputational risk
reputational risk as critical as the other risk and hence to control it through prevention
categories (strategic, operational, financial and or mitigation solutions.
supply chain risk). Nevertheless, results did not These results reveal an increasing aware-
show any relationships with these risk cate- ness about the relevance of reputational risk,
gories, and this might suggest a potential isola- but a limited adoption of dedicated manage-
tion of reputational risk from the other risks. rial procedures.

© 2015 Macmillan Publishers Ltd. 1363-3589 Vol. 18, 4, 248–260 Corporate Reputation Review 257
 Managing Reputational Risk
To summarize, despite the value of repu-
tation, which might be higher for some
companies and lower for others, companies
should define this value as an ‘asset at risk’ in
order to allocate adequate resources to man-
age reputational risk. Along with this aspect,
decision makers should formally identify the
sources of reputation (Carol, 2008; Louisot
and Rayner, 2011) and the internal and
external sources of reputational risk (Eccles
et al., 2007). The challenge of analysing the
interconnections between risks and the
cause–effect relationships between risks and
their sources is complex, but these represent
the key competence for managing effectively
reputational risk.
CONCLUSION, LIMITATION AND FUTURE
RESEARCH
In this paper, we established a relationship
between corporate reputation and risk man-
agement, providing a model for interpreting
and managing reputational risk. This repre-
sents a contribution for the theory building of
reputational risk and a better understanding of
companies risk management priorities.
However, this research is exploratory in
nature and is based on a limited (though
diverse) sample of well-known companies.
Although our sample was adequate to
explore this phenomenon, extending the
dimensions of our survey would be beneficial.
There is also an opportunity to extend our
study to different countries with larger sample
sizes, so a stronger theory of reputational risk
management could be better generalized.
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