Reputational Risk is High

A recent survey from business advisory BDO found that many C-Suite business executives* believe that businesses are increasingly vulnerable to reputational risk. In fact, a full 70% of respondents say their businesses have experienced an event that has proposed a threat to its reputation and less than half (45%) believe their crisis strategy is proactive. The survey among 500 global C-Suite executives found that 99% say that business integrity is imperative to maintaining a brand’s reputation. 99% is HIGH. It’s absolute. Rarely do we see 99% figures in research, underscoring its supreme importance.

Overall reputational issues are at the top of what are the greatest risks.The survey has several interesting findings that are worth noting here:

• Major risks in the next few years include a failure to have robust succession planning (39%); the rate of globalization (35%); and poor corporate culture (47%). The latter risk comes from the belief that executives worry about a new generation requiring different working styles (50%) and a lack of diversity (38%). I expected culture to rank high but I was surprised by succession planning in that most executives usually think it is well taken care of by the board or by the top executive team but then there is always the big surprise when there is a succession kerfuffle or negative media coverage.

• C-suite executives leave no doubt about the importance of the CEO brand: 62% agree their brand is either synonymous or closely tied to that of the chief executive. The research I spearheaded on CEO reputation over many years confirms this finding. It of course depends on the country because believe it or not, the U.S. and U.K. as well as other Euro nations see the CEO=brand link less strongly than Asia, Africa, Middle East and Latin America. This inextricable connection between CEO and corporate reputation is a double-edged sword as BDO’s research found: 85% of respondents say that as leaders become more visible (think of WeWork’s Adam Neumann), reputational risk is introduced. Any unethical behavior on the part of a chief executive can harm a corporate brand. Today, as more CEOs take positions on social issues such as racism, LGBTQ matters, climate change, immigration, COVID-protection, etc., the risk is always there.

  * The survey did not include North America