Articulo_1_EN_Doxa_31_Learning_about_reputational

employees are some of the factors that can be damaged by a reputational crisis resulting from fake news or misleading information.

2. Reputational risk and its implications

During the current health crisis and the pandemic lockdown, businesses were forced to deal with new scenarios. It is interesting to look at the Global Risk Management Survey of 2019 in which the risk of a pandemic or health crisis was ranked as 60th. The top global risks until just very recently were as follows: firstly, suffering cyber-attacks and data breaches; secondly, the risk of disruptive technologies; and thirdly, not knowing how to innovate or meet the customer’s needs (AON, 2019). Indeed, these possible risks are still at the top of the list, but they now seem to have a different perspective, and their latent risk has increased. This is due to reputational risk having an expanding nature that overlaps others, or is added to them, especially those related to environmental, social, and governance risks, and there are negative implications in terms of the occurrence, duration or expansion of these other risks that can affect the organisation, as well as people, products and services (Llorente & Cuenca, 2019).

Before the global pandemic, the AON consulting firm’s study was considering reputational risks such as the Volkswagen emissions scandal, Petrobras’ subornation, Wal-Mart’s bribery, the Continental Group’s link to drug trafficking, BP’s environmental impact, Trump’s claims about Huawei, fashion companies’ social commitment, and so on. Nowadays, the current crisis is traversing all social, political, economic and scientific strata, as the world questions what life will be like after Covid-19.

The aftermath of this global crisis will affect the functioning of businesses as they face an impact on the global economy and financial markets comparable to the crisis of 2008 (McKinsey & Company, 2020), if not worse (Portillo, 2020). In this regard, the economic impact will be unparalleled in Spain, which is highly dependent on the services sector and has an overwhelming number of SMEs, which will make its recovery more difficult (Corporate Excellence, 2020).

In the meantime, we can observe what is happening and learn from it in order to increase our knowledge related to the corporate reputation of organisations and companies.

Organisations have generally been dealing with corporate risk management through their Boards of Directors, Chairpersons of those boards, and other managers involved. Risk Management involves a strategic effort from the entire company as well as the design of a plan to identify potential events that may affect the organisation, formalisation of possible risks within the accepted level of risk, and a reasonable assurance of achieving the objectives (COSO, 2017). One of the most important yet most ambiguous risks for companies is that of reputation. For years, organisations have been encouraged to prepare for turbulent times in which traditional risk and crisis management have been adjusted to new types of reputational risk (Bonime-Blanc, 2018), especially those related to the digital world (KPMG, 2019).

The importance of good risk management is related to other risks of the organisation, in addition to the resulting media impact. It is essential to have a programme that covers all of the probabilities of occurrence as well as the process of