What does Reputational Risk mean? Read on to discover the definition & meaning of the term Reputational Risk - to help you better understand the language used in insurance policies.
The risk that negative publicity regarding an institution's business practices will lead to a loss of revenue or increased litigation. An institution's reputation, particularly the trust placed in the organization by its customers, may be irrevocably blemished due to perceived or actual breaches in its ability to conduct business ethically, securely, and responsibly. For example, companies that are publicly condemned for their poor environmental policies or high greenhouse gas emissions might eventually suffer a blow to their reputation. A tarnished brand can negatively influence voters who sit in judgment in court cases, community decision-makers on corporate expansion and new construction, reporters who cover a corporation's business activities, consumers who are potential customers, environmental activists who may protest a company's operations, and investors.
We hope the you have a better understanding of the meaning of Reputational Risk.