Reputational risks

What does the public think about my institution? How do the shareholders assess our actions? Probably every good bank board of management asks itself these questions regularly. It has not just been since the last financial crisis that banks have had to fear for their good reputation and therefore usually employ a considerable number of staff to actively improve it. However, to date there are only a few procedures or methods that prescribe a specific course of action in the event of reputational risks that are imminent or have come to a head. The lack of such structures often entails financial losses or considerable cost in handling – as the last ten years have clearly shown.

Reputational risks are now also playing an increasingly important role at the regulatory level. In particular, the EBA's SREP guidelines formulate the expectation that banks establish dedicated RepRisk management processes – which certainly also holds opportunities for the financial institutions concerned to identify and counteract risks in a structured manner.

There are different ways to prevent potential losses due to reputational risks. The introduction of a reputational risk committee, complementary scenario analyses as well as the successful implementation of a steering framework – these are all measures that can be decisive for a bank. Synchronising these different elements and tailoring them to the financial institution is of utmost importance, especially for sensitive client relationships based on trust.

Contact us and benefit from our extensive experience in reputation risk management. With our expertise, we are happy to help you successfully integrate preventive and reactive reputational risk management into your institution's structures or optimise your existing risk management system.