Reputation risks of a Regulatory Inquiry

The importance of corporate reputation 

Reputation forms a hugely important consideration for businesses, with the World Economic Forum finding that over 25% of a company’s market value derives from this - a figure that is likely to be much higher in today’s society where everyone is much more connected. Handling and mitigating reputation risk should therefore be a priority for businesses, for whom repetitional damage could entail a particularly destructive loss of customers, profit and market share. 

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What are the reputational risks of a regulatory inquiry?  

Businesses frequently face reputational risks from a variety of sources. a carefully constructed company image can be easily tarnished via data leaks, fake news and the misconduct of senior management. 

Business and organisations are now facing greater scrutiny and so another area that can be a risk to a reputation is where there is a regulatory inquiry or suggestions of non-compliance with regulations Today’s regulatory environment is considerably more aggressive than it was many years ago, particularly given the rise of the internet and increasing environmental awareness and sustainability campaigns. This has meant that regulatory inquiries is far-reaching, covering among other things: 

• Accurate book-keeping 

• Data privacy and GDPR 

• Whistleblower protection 

• Anti-corruption 

• Anti-bribery 

• Corporate wrongdoing and accountability 

• Environmental protection (for example, reduction and safe disposal of waste).  

It is therefore very important for companies to ensure compliance with all relevant procedures and law to safeguard their reputations in this respect.  

Many stakeholders use corporate compliance with regulations as an important indicator of a company’s credibility, legitimacy and reputation. Inquiries that indicate failures in compliance not only breach contractual and statutory requirements, resulting in the hefty fines that result from this, but destroy customer expectations and fidelity to the business. Failures can also result in individual accountability measures, with the naming and shaming of senior executives also creating reputation damage for the company a