The survey included 500 global executives from 250 top companies in retail, manufacturing, leisure and hospitality, transportation, non-governmental organizations (NGOs), and charities from 20 countries.
The survey also revealed the following key findings:
- More than four-fifths (83%) of senior executives say they take reputational risk seriously and rank it among the top five risks in their organization.
- According to survey results, 77% of senior executives are not fully confident in their company's reputational and ESG 'risk readiness.' Positive progress is being made, but more can be done; only a moderate amount of assessment has gone into analyzing the risk or putting in place a formal process to ensure governance, accountability, monitoring, and reporting.
- Despite the presence of formal teams, approximately 75% of companies do not hold their board members accountable for reputational and ESG risks, creating a negative perception among employees of a lack of commitment.
- 70% of senior executives are more concerned with the risk of reputational damage caused by an internal event (e.g., employee abuse or ESG) and less concerned with the risk of reputational damage caused by an external event (e.g., cyber crime) – what appears to be an oversight on an important external risk could be the result of a board that is not perceived to take the matter seriously.
- 74% of senior executives are aware of the potential cost of reputational damage, and as a result, 86% have set aside funds to cover the costs, and 84% have a marketing and communications contingency budget. These costs, however, may not be completely accurate because 87 percent do not forecast the frequency and severity of potential damages, exposing a significant risk of budget misallocation.
"In an increasingly digital, service-oriented economy, reputational risk is firmly on the corporate agenda," said Garret Gaughan, Head of Global Markets Direct & Facultative, WTW. However, our findings suggest that organizations may have underestimated the length and depth of a potential crisis. Few appear to have the level of modeling required to quantify the magnitude of financial losses. This means they may be unprepared for the full impact of a damaging reputational event on their business, which is why it is critical to consider reputational crisis insurance to mitigate potential reputational risk."
For more information and to access the survey, please visit Are Businesses Prepared for Reputation Risk?
About WTW
WTW offers data-driven, insight-driven solutions in the areas of people, risk, and capital. We help organizations sharpen their strategy, improve organizational resilience, motivate their workforce, and maximize performance by leveraging the global perspective and local expertise of our colleagues serving 140 countries and markets.