Reputation – Managing the single greatest risk facing business today

Reputational risk is now considered the single greatest threat to businesses today. Most companies, however, are still not managing this risk appropriately. This paper argues that following the recommendations of the Turnbull Report into boardroom responsibility for risk management and accountability for intangible assets such as reputation, and the Higgs Review of corporate governance recommending a more active and independent role for non‐executive directors (NEDs), NEDs should be appointed as reputation guardians for the corporation – in much the same way as they now sit on audit, nomination and remuneration committees. This recommendation is given added weight by the proposed implementation of the Operating and Financial Review (OFR) in 2004, which, inter alia, seeks to embed reputational enhancement and protection in corporate reporting. NEDs will need a powerful strategic management tool (stakeholder audits) to ensure that they can perform this task properly. They will also need the support of an experienced communications function which will be critical in conducting, interpreting and advising on appropriate courses of action arising from the stakeholder audit.