2012 Kellogg Risk Summit Program
Regulatory and Reputational Risk
In the recent years, we have witnessed many corporate crises, resulting in loss of market share and shareholder value, stemming directly from reputational and regulatory risks. Indeed, in recent polls of executives, it is reputational and regulatory risks that trump other risks as those of greatest concern to executives. In many of these cases, the role of media and the impact of firm’s reputation have weighted heavily on the outcome. Consider the events facing Toyota a few years ago and how the outcome was debating in the media. The velocity of such reputational issues has increased with digital reporting and social media, making management of such situations more difficult but also more critical. Simultaneously, corporations are experiencing more and more stringent regulation from government agencies. The banking industry has felt the brunt of the new Dodd-Frank Act, but changes in healthcare, customer privacy, and even investor rights suggest a future of more and more complex regulatory risks.
The risks posed by failed reputational management and regulation are of critical importance. Each has the potential to alter not just a firm’s financial outcome but an entire industry and its mode of operation. This in many ways poses the greatest risk for firms and investors alike. We will explore frameworks and paradigms used by leading firms to manage reputation and control regulatory risks.