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Reputation and Reputation Risk – Part III

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​So far, in the two prior posts (August 12 and August 19), I have discussed how:

  1. There are multiple dimensions to any organization's or individual's reputation. Reputation is not limited to the value of the brand, but also includes how your organization is perceived with respect to customer-focus; product quality, design, and safety; innovation; fair pricing; regulatory compliance; social responsibility; a good place to work; prompt payment to suppliers; aggressive negotiator with vendors and partners, a trusted partner, and so on.
  2. Reputation is not a risk, it is an asset or liability — actually, a combination of assets and liabilities, one for each dimension of reputation. It can enable or make it more difficult to achieve organizational objectives.
  3. A deterioration or improvement in reputation can have an effect on the achievement of one or more objectives. Such a change therefore is a potential source of risk to objectives.
  4. The way to value your reputation is not by way of a $$ value provided by a third party who "values" your brand. Instead, it should be based on how it can positively or negatively affect the achievement of objectives.

What does that mean for the risk practitioner, executive, board member, or internal auditor?

This is what I recommend.

  1. Understand, for each of your organization's corporate objectives, how and to what extent your reputation matters. For example, if you have a revenue objective understand how a change in your reputation with your customers and channel partners might either positively or negatively affect the achievement of that objective. If you have an objective related to cost management, how would a change in your reputation with suppliers, service providers, and so on affect you?
  2. Consider how those changes in the value of your reputation assets and liabilities might arise. What would be a source of reputation-related business risk?
  3. Now assess, evaluate, treat and then monitor those sources of risk.

There's a major linkage between your organization's culture and its reputation.

  1. Understand the behaviors you need everybody to demonstrate in order to maintain or improve each facet of your reputation. Assess, evaluate, treat, and then monitor desired behaviors.
  2. Understand how decisions may affect your reputation, and include that consideration in your decision-making process. For example, a decision may affect how customers see your commitment to them; how employees see the workplace and their prospects; whether suppliers perceive you as loyal; and so on.

Before I finish this post, let me tell you that each of us has our own personal reputation — with our manager, our peers, our staff, our customers (if we are customer-facing), suppliers (if we deal with them), and so on.

That reputation or brand distinguishes us from others. It leads to promotion or stagnation, trust or mistrust, excitement in our work or boredom, and more.

Please read this classic article by Tom Peters, "The Brand Called You," and consider applying its principles in both your personal and professional life.

Is your organization's reputation or brand what it needs to be to be successful?

How about yours?

Are you managing those assets? If not, how are you going to achieve your objectives?

I welcome your comments.

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