Reputational Risk
Reputational Risk
Reputational risk refers to the potential harm to an organization's reputation and credibility as a result of its actions or decisions.
Reputational damage is the loss to financial capital, social capital and/or market share resulting from damage to a firm's reputation. This is often measured in lost revenue, increased operating, capital or regulatory costs, or destruction of shareholder value. Ethics violations, safety issues, security issues, a lack of sustainability, poor quality, and lack of or unethical innovation can all cause reputational damage if they become known. - Repuational Damage, Wikipedia
Example: Wells Fargo, a large US bank, was involved in a scandal in 2016 in which it was found to have opened millions of unauthorized bank and credit card accounts in order to meet sales targets. The scandal resulted in significant fines for the bank and significant reputational damage, as well as a loss of customer trust.
See: Wells Fargo Cross-Selling Scandal
Example: In 2012, Barclays was fined $453 million by US and UK authorities for [manipulating global benchmark interest rates. The scandal led to the resignation of CEO Bob Diamond and a significant loss of customer trust.
See: Understanding the LIBOR Scandal