Reputational risk

Reputational risk is the risk of negative economic impacts that could result from damage to the company reputation for a company. It is part of the business risk and can be taken into account in the context of risk management.

Importance

Reputation is also referred to as the " good name " or the " good reputation " or the " prestige " ( of a company). In the operation of business operations is the possibility that changes the reputation of a company. In regulated markets, the regulators are trying to influence through sanctions and a consistent framework in the reputation of the company. Examples are the chambers of crafts or the BaFin.

Basically, a company is trying to achieve through a high reputation a great customer loyalty, so as to gain a competitive advantage over competitors. Possible areas where reputation can be increased sustainably are:

• Trust
• Working conditions
• Conservation
• Sponsoring
• Information to the public
• Stakeholder dialogues with non-governmental organizations (NGOs )

Ethical behavior can lead to increase a company's reputation. The reputation is also considered in the ratings of credit rating agencies. In this respect, the reputation is to be understood as an effect of the lived business ethics of a company.