Businesses have become increasingly vulnerable to reputational risk, according to the latest findings from BDO.
The firm’s fifth annual global risk landscape report found that 70% of businesses have experienced an event that “proposed a threat” to its reputation this year.
Its findings come from a survey of 500 C-suite executives across the world, which revealed that companies are “alert to the dangers” of reputational risk.
Some 25% said that shareholder price was a primary consequence of reputational damage, while a further 25% believed that customers would take their custom elsewhere. Family-run business and manufacturers felt the highest reputational risk amongst those surveyed.
BDO found that many companies still “remain reactive” in their approach, however, with 45% of respondents believing their crisis strategy was proactive. Some 35% considered themselves to be “reactive” when handling reputational issues.
The accountancy firm added that “trying to demonstrate corporate integrity while acting without values is an issue that can touch even reputable companies”.
Its survey found that many businesses “worry more about the perception of integrity than the practice”, as 87% of executives believed their organisation was culpable and 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 BDO, said: “Clearly integrity is vital, with 99% 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.”
He added: “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.”