By: Luke Jones, Published on April 29, 2017 07:10 PM, Last Update on April 30, 2017 07:14 AM
While cybercrime and disruptive technologies present challenges, the biggest threat to organizations in 2017 is reputational damage. According to Aon’s 2017 Global Risk Management Survey, an unpredictable regulatory environment and unstable market mean a dent in reputation can also be extremely harmful to a brand.
This has been shown through a number of recent major incidents. Electronics giant Samsung suffered a major loss of revenue due to the disastrous recall of the Galaxy Note 7 smartphone. It should be noted that the South Korean giant seems to have bounced back with its latest handset.
2017 could be unforgiving for companies that suffer poor brand reputation. For example, the recent United Airlines scandal and a negative advertiser backlash against so-called hate videos on YouTube. Both companies are suffering the impact, with YouTube reportedly losing hundreds of millions of dollars and content creators going out of business.
According to Kieran Stack, chief commercial officer at Aon Risk Solutions, insurance companies also face this reputational risk. However, he says that most providers have been innovative in addressing the problem, even if more work can be done.
“There’s always going to be components of reputational and brand damage that is a business risk,” he said. “But if you step back and look at, what are the potential causes? Supply chain management, cyber, unethical behavior.
“The evolution to take it further would be to look at the trigger as well, in terms of providing coverage for intangible assets like brand associated failures.”
In the report, the company says the next most dangerous threats after reputational damage are economic slowdowns, increased competition and regulatory changes in second, third, and fourth.
“The one take away for risk professionals is: don’t fall into a false sense of security of ‘we understand our risks’,” Stack said. “It’s vitally important to go back and look at how prepared you are around those risks. Have you identified internal and external vulnerabilities?”