“70% of businesses experience threats to corporate reputation” highlights BDO study
30 June 2020
BUSINESSES ARE becoming increasingly vulnerable to reputational risk, with 70% of them having experienced an event that has posed a threat to their reputation. That’s according to the fifth annual Global Risk Landscape Report produced by specialist accountancy and business advisory firm BDO LLP.
BDO’s extensive survey of no less than 500 C-Suite executives across the EMEA, Europe, the Middle East, Africa, Asia Pacific and the Americas shows that companies are alert to the dangers, with 25% suggesting shareholder price is a primary consequence of reputational damage, with a quarter also believing customers will take their custom elsewhere in the wake of a damaging incident. Family-run businesses and manufacturers feel the highest reputational risk.
Despite the threat, it’s clear that too many companies remain reactive in their approach, with less than half (45%) of those surveyed believing their crisis strategy is proactive and over a third (35%, in fact) considering themselves to be reactive when it comes to reputation-centric issues.
Trying to demonstrate corporate integrity while acting without values is an issue that can touch even reputable companies. BDO’s survey reveals the scale of so-called ‘integrity washing’, with businesses worrying more about the perception of integrity than the practice. A significant 87% of executives believe their organisation is culpable on this particular point, while almost half (49%) agreed with the statement: “So long as we are perceived to have integrity, we do not actively prioritise putting it into practice.”
Nigel Burbidge, global chair of risk advisory services at BDO LLP, commented: “Clearly integrity is vital, with 99% of respondents agreed on that point. Being trusted confers extraordinary advantages on a given business and secures customer loyalty. Customers flock to brands they believe in, and that sense of integrity allows the company to outperform its rivals.”Burbidge added: “However, we have found deep disagreement on who’s responsible for transparency. One-in-three companies admits to being reactive on reputation. That’s not the best strategy. A worrying 87% say their company may be guilty of ‘integrity washing’. Clearly, then, there is much work to be done here. Integrity should be woven into the fabric of every company. Everyone must share the same ethos.”