Nowadays, with the speed at which the internet and social networks provide us with immediate access to any information, it is important to take care of an organisation’s reputation, as it is an intangible but very valuable asset, which can be difficult to build and yet extremely easy to lose.
Reputational risks thus refer to the threat of damage to the image and public perception of a company, brand or individual.
Some of the factors that can influence a poor reputation are:
Business malpractice: Unethical behaviour, corruption, fraud or any other form of business misconduct.
Product or service quality issues: If a company’s products or services fail to meet expectations or, worse, cause harm to consumers, this can have a significant reputational impact.
Industrial relations crisis: Conflicts with employees, strikes or labour problems can generate negative perceptions of the company, especially if the company is perceived as not treating its employees fairly.
Environmental impact: Business practices that damage the environment can have a negative effect on a company’s reputation, especially in a context where sustainability and environmental responsibility are increasingly valued.
Legal problems: Litigation, legal fines or problems with the law can negatively affect a company’s reputation.
Poor crisis management: The way in which a crisis is handled can be as important as or more important than the crisis itself, worsening reputation even further if there is not a quick and effective response.
Social media problems: Negative comments, viral reviews or social media campaigns can quickly spread damaging information.
Unfair competition: Actions by competitors that damage a company’s reputation, such as defamatory campaigns or unfair strategies, also represent a risk.
Managing reputational risks involves implementing proactive strategies to build and maintain a good reputation, as well as contingency plans to address any situation that may negatively affect the company’s image. Transparency, accountability and effective communication are key to reputational risk management.
Some of the following risks are directly related to corporate social impact:
Greenwashing: The accusation of greenwashing occurs when a company exaggerates or misrepresents its environmental and social efforts in order to present a more favourable image. This can damage reputation if the company is perceived as not living up to its claims.
Supply chain issues: The discovery of unethical practices or impacts related to social issues such as child labour or unfair working conditions can have negative reputational consequences.
Lack of transparency: Lack of transparency in business practices and social impact reporting can lead to mistrust by stakeholders and affect reputation.
Ineffective implementation of social initiatives: If a company’s social initiatives fail to make a real positive impact or are not implemented effectively, the company’s reputation could suffer.
Lack of internal diversity and inclusion: If a company promotes diversity and inclusion values externally but does not practice them internally, there may be accusations of reputational hypocrisy.
Adverse reactions to sponsorships or partnerships: Partnerships with specific organisations or causes can generate negative reactions if the public’s perception of those entities changes.
Failure to meet ethical standards: If a company is accused of violating ethical standards, either in its business practices or in its social initiatives, reputation can suffer.
Changes in strategic direction: If a company changes its social focus abruptly or without effective communication, it can lead to confusion and scepticism about its social intentions and commitments.
EMUCA has made available to interested parties an ethical communication channel to receive any information that involves non-compliance with current legislation and has also established a communication policy.
In addition, since 2006 we have been certified as a Family-Responsible Company; a certificate that recognises our commitment to policies and initiatives that ensure work-life balance and equality among employees. And we have a strong commitment to our sustainability strategy.
Effective management of these risks has the following positive implications:
- Increased Trust and Credibility, by demonstrating ethical conduct.
- Customer loyalty, as they perceive that the company inspires trust.
- Brand value, with a stronger competitive position.
- Talent attraction, as they are well valued and have a positive impact.
- Strengthening stakeholder relations
- Resilience to crises by being better prepared for more effective management
- Competitive differentiation, by differentiating ourselves from the competition by attracting consumers.
