ESG catapults reputational risk into the top five, Willis Towers Watson reports
01 Novembro 2023 - 8:00AM
With ESG concerns rising to the top of corporate agendas,
organizations are increasingly aware of the potential cost of
reputational damage. However, as awareness increases, confidence in
the risk management systems and crisis response capabilities has
fallen since 2021, according to the 2023 Reputational Risk
Readiness Survey Report released today by WTW (NASDAQ: WTW), a
leading global advisory, broking, and solutions company.
The survey polled 375 senior executives from 20
countries, each responsible for risk strategy at their
multi-billion-dollar global organization. Together their companies
span the retail, manufacturing, leisure, transportation, and NGO
sectors. The study found:
- Environment, social, and governance risks are three of
respondents’ top five reputational concerns (see chart).
- Reputation is now a top-three risk for 26% of companies, up
from 18% in 2021, and a top five risk for 55%.
- 95% have a specific budget for reputational events.
- Just 10% engaged monthly with stakeholders on reputation
issues, down from 37% in 2021.
- Only 14% link a formal governance process for reputation risks
to board-level KPIs, down from 23% in 2021.
- Only 13% said their resilience to reputational issues is very
good, down from 23% in 2021.
These findings represent a downgrading of risk
management capabilities. However, it may be more of a reality check
than a change in reality. As reputation risk is increasingly viewed
through a finance and ESG lens, assessments of risk readiness are
likely to be more rigorous and therefore less optimistic.
Driven by the need to provide business partners,
customers, regulators, investors, and lenders with their ESG
credentials, reputation has become a financial risk. That
development has changed attitudes towards reputation management. In
response, finance departments now take a greater role. Three of
five companies surveyed now have their senior financial controller
as a member of their crisis event team. That’s up by nearly 50%
from 2021.
“Reputation management is changing with the world.
The companies leading the reputation-risk maturity curve are those
that think regularly and hard about the potential strategic and
financial impacts of incidents and do so in the context of the
evolving influence of ESG and social media,” says Hugo Wegbrans,
WTW’s Global Head of Broking. “Companies should hold regular,
formal, board-level discussions about reputational risks, and
proactively assess not just the threats, but also the reputational
opportunities that may come with a crisis. It’s quite possible to
suffer a reputation event and come out of it looking even more
favorable to customers.
“At first glance, this wide-ranging survey seems to
show that businesses are backsliding on reputational risk, but the
reality is very much more nuanced,” Wegbrans continued. “As ESG
concerns widen, especially in light of the explosion of social
media, companies have begun to assess reputational risk more
rigorously. That’s made them see reputation as a financial risk,
not just a PR concern, and led them to increase budgets to deal
with reputation crisis events. At the same time, though, they’re
nervous of potential backlash events on social media, which may
mean missed opportunities. It’s time for a new approach, and our
survey shows that companies realise that.”
About WTW
At WTW (NASDAQ: WTW), we provide data-driven,
insight-led solutions in the areas of people, risk and capital.
Leveraging the global view and local expertise of our colleagues
serving 140 countries and markets, we help organizations sharpen
their strategy, enhance organizational resilience, motivate their
workforce and maximize performance.
Working shoulder to shoulder with our clients, we
uncover opportunities for sustainable success—and provide
perspective that moves you. Learn more at wtwco.com.
Media Contacts:
Sarah BookerSarah.Booker@wtwco.com
+44 (0)7917 722040
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