Reputation Risk

Defining reputation risk

Reputation risk is one of the categories of risk used in organisations. It was identified as a risk category by Turnbull and a number of events in various parts of the world have highlighted the importance of this risk.

Reputation risk concerns any kind of deterioration in the way in which the organisation is perceived, usually, but not exclusively, from the point of view of external stakeholders. The cause of such deterioration may be due to irregular behaviour, compliance failure or similar, but in any event, the effect is an aspect of corporate behaviour below that expected by one or more stakeholder. When the ‘disappointed’ stakeholder has contractual power over the organisation, the cost of the reputation risk may be material.



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