What is the definition of reputational risk and what are the reasons for the formation of reputation

"Reputation Capital" believes that there are several main aspects:

1) Civil litigation cases.

BanksCommercial banks fail to fulfill their obligations, causing losses to customers, leading to civil lawsuits. Once a bank is involved in a civil lawsuit, it can obviously damage its reputation if it is not handled properly. The cases that have led to civil litigation mainly include fraudulent use of deposits and theft of credit cards.

2) Public complaints.

For example, in retail, complaints about counter operations give rise to misunderstandings or disputes with customers. If public complaints cannot be resolved through the bank's complaint channels in a timely manner, it will have a negative impact on the bank's reputation.

3) Financial crime cases.

Financial crimes by commercial banks can damage the reputation of banks by making the public doubt about their business management capabilities.

4) Administrative penalties imposed by regulatory agencies.

Banks and commercial banks have been given administrative penalties by the China Banking Regulatory Commission, the People's Bank of China and other regulatory agencies for violating financial management laws and regulations, and have been punished by auditing, taxation, industrial and commercial administration and other departments for violating financial management laws and regulations, which is likely to cause negative public evaluation and negative impact.

5) Downgrading of authoritative institutions.

Due to the special position and influence of authoritative rating agencies in the market, once a bank's rating is downgraded, it may lead to negative speculation among market investors and the public, which will lead to reputational risks for the bank.

6) Market rumors.

Market rumors can sometimes have a fatal impact on the operation and management of commercial banks, especially in the contagion stage of the financial crisis, and any unfavorable or even absurd rumors in the market may lead to a "run on banks".”

7) Miscellaneous. The above is the knowledge of what reputational risk is and what causes it, reputational risk is now widespread in society and occupies an important position in society.

The causes of reputational risk are very complex, and may be the result of a combination of internal and external risk factors of a commercial bank, or it may be a very simple risk factor that triggers a serious reputational risk.

If commercial banks fail to properly address these risk factors, it may trigger adverse reactions from the outside world.

Once a commercial bank is found to have serious deficiencies in its financial products or services, or that there are endless cases of violations due to inadequate internal control, it will be difficult to make up for the substantial damage caused to the bank's reputation, even if it spends a lot of time and energy on crisis management after the fact.

A bank with frequent operational risk events will give the public a bad impression of internal management chaos, low management quality, lack of integrity and sense of responsibility, etc., resulting in a decrease in the trust of the public, especially customers, in the bank, the bank's job position is unattractive to outstanding talents, the original talent is lost in large quantities, and the shareholders lose confidence in the bank's development prospects, and have doubts about the long-term holding of the bank, and then sell a large number of shares in the capital market, resulting in stock prices, and the bank's market value shrinks. This eventually leads to stringent regulatory measures by regulatory authorities, etc.

The book "Reputation Capital" explains it this way, 1. The standard is vague.

1) Serious internal incidents, such as strikes and corruption caused by capital conflicts, and (2) Work mistakes, such as waste and unqualified product quality caused by imperfect management mechanisms.

4) Disputes such as consumer disputes, economic contract disputes, etc.

Misjudgment of risk.

Some companies will have a clear understanding of the possible reputational crisis risk, but sometimes the risk can cover the loss caused by the risk, and the company will choose to take the risk.

In the 90s of the 20th century, in the first decade of the health care products industry, some health care product companies will put large-scale advertisements and advertorials in a certain place, and they will not care about obvious exaggeration and violation of the advertising law. It is this kind of reputation for profit.

has made the entire health care product industry pay a heavy price.

3. Luck psychology.

There are internal and external causes in any crisis, but in general, internal causes play a major role. The internal causes of reputation crisis are mainly as follows: weak awareness of reputation management among managers; lack of awareness of crisis management; The organization's own decision-making violates the requirements of the basic principles of public relations; low quality of organizational staff; conduct that is seriously contrary to the purpose of the organization; There is no normal and orderly communication channel.

In short, we must not have a mental 4 vandalism about the above problems.

For deliberate smearing, first of all, seek help from the management agency and strive for credible third-party support; secondly, to clarify the facts to key groups; Finally, collect and retain the necessary evidence to eliminate adverse speech at its source, and use legal means to protect its reputation if necessary.

5 Misunderstandings among the public.

Sometimes there is no problem with the company's own work and product quality, and there is no incident that is harmful to the public interest, but due to various reasons, it is misunderstood by the public, and the enterprise is in crisis, which is a misunderstanding crisis event.

6. Uncontrollable majeure.

First of all, we should start from leaders at all levels to raise the awareness of reputational risk to the same level of importance as other risks, and set an example to establish reputational risk awareness from top to bottom. Secondly, we should actively advocate that all employees should consider the public opinion that may be triggered in every word and deed. It is necessary to popularize the ways and means and knowledge of preventing reputational risks through training, lectures and other means, so as to encourage all employees to consciously safeguard the reputation of the bank and effectively form reputational risk management.

Oriented corporate culture.

The second is the combination of rewards and punishments, and efforts should be made to actively prevent reputational risks. Illegal operation is the biggest reputational risk for banks. It is necessary to incorporate reputation risk management into the compliance management system, realize the organic combination of business development and reputation risk management, and achieve active prevention, active monitoring, and active and effective disposal.

At the same time, we should develop prevention plans and reward and punishment systems to reward and encourage those who improve the bank's reputation, and to prevent and punish those who damage the bank's reputation.

The third is to improve the system to reduce customer complaints and prevent emergencies.

Work hard. In the context of the transformation of financial business development and the enhancement of the individual awareness of stakeholders, it is particularly important to improve the efficiency of bank supervision. It is necessary to establish a system for the work of the Olympic situation in which the Olympic situation is graded and managed by category, as well as a special management system for the emerging mainstream media.

and risk investigation system: establish a reputation risk disposal assessment, inter-responsibility, reward system and complaint handling supervision and evaluation system, subdivide the level of public opinion, and reduce the risk caused by customer complaints. It is necessary to improve the early warning mechanism for sound and risk crises, reduce the degree of harm of emergencies, and even stop their occurrence.

Fourth, we should increase training and work hard to formulate countermeasures. Good corporate culture and internal management are the prerequisites for winning the capital and doing a good job in the Olympic situation. Improve the contact person system and establish public opinion monitoring.

team, do a good job in daily monitoring and analysis, and strictly implement the daily zero report system; It is necessary to increase the education and training of risk awareness, and build a team that is professional, quick to respond, and responsible.

A strong high-quality professional team continuously improves the monitoring and processing capabilities of the Olympic situation, strengthens the whole process management of Olympic monitoring, identification, early warning and guidance, and formulates countermeasures that may cause acoustic risks through in-depth analysis of the cases that have occurred, so that the prevention and control of acoustic risks can be implanted into the long-term development of the bank, and consciously form a good reputation culture.

Fifth, highlight the key points and work hard to strengthen communication with the Ministry of Supervision. Strengthen the contact with the competent departments, propaganda departments, and news, understand the internal operation rules and relevant management policies and regulations, handle the relationship with the news, communicate in a timely manner, clarify the facts, and ensure that the incident is objectively reported as much as possible, so as to reduce suspicion and reduce the harm of the incident. Relying on the administrative resources of ** at all levels and the Ministry of Supervision[ ], timely adopt a method of grooming and positive publicity and guidance to jointly deal with reputational risks.

Recently, the publication of "Reputation Capital" defines reputational risk as the risk of negative evaluation of a commercial bank by stakeholders due to its operation, management and other behaviors or external events.

The new trend of reputational risk management research - "Reputational Capital" is discussed in detail.

A good reputation is an important resource accumulated by a bank for many years of development, is the foundation of the bank's survival, and is the guarantee for maintaining good investor relations, customer relations and credit relations. Good reputation risk management plays a non-negligible role in enhancing competitive advantage, improving the profitability of commercial banks and achieving long-term strategic goals.

Sometimes, it may be difficult for banks to find or solve such hidden risks, so they need to use external consulting institutions to help banks build a sound risk management system. Wefame Consulting is a consulting company specializing in reputation risk management, and Wegood Consulting works closely with customers to form an easy-to-implement comprehensive improvement plan for reputation risk management through a series of interviews. Through training and drills, improve the reputation risk management concept and crisis response ability of all employees; Through system and process design, we help establish an efficient and orderly reputational risk management system; Establish an operational reputational risk management system by analyzing needs; Through evaluation and optimization, the internal circulation of reputation risk management is improved, and the goal of reputation risk management is achieved by banks.

Corporate reputation risk management is a systematic project, including the formation of a reputation risk management system, the construction of an information system, the construction of a system and the optimization plan. This is not something that can be done well by the enterprise itself, and there must be a professional external organization to assist the enterprise to complete this work together. At present, Shanghai We-Innova Consulting Co., Ltd. is a leading strategic consulting agency in China, and it is also a consulting company specializing in reputation risk management.

If you want to carry out reputation risk management, you can look for this company, which has many years of business experience and can provide enterprises with a package of solutions to help enterprises quickly improve the level of reputation risk management.

The risks faced by commercial banks mainly include credit risk, market risk, liquidity risk, operational risk, legal risk, country risk, reputation risk and strategic risk, a total of eight risks. In real life, commercial banks belong to a type of banking financial institution.

1.Credit Risk.

Credit risk, also known as default risk, refers to the loss caused by the borrower's failure to repay the principal and interest of the loan as required by the contract. Commercial banks themselves are enterprises engaged in monetary and credit business, and the nature of their business determines that credit risk is the main risk they face, which is managed by the credit examination and approval department of commercial banks.

2. Market risk.

Market risk refers to the possibility of incurring losses due to fluctuations in market capitalization. The magnitude of market risk depends primarily on changes in commodity markets, currency markets, capital markets, and other market conditions. Market risk is managed by the Financial Markets Department of Commercial Banks.

Three. Liquidity risk.

Liquidity risk refers to the possibility that the bank's own liquid assets cannot meet the needs of immediate payment of due liabilities, thus making the bank insolvent and causing losses. The Planning and Finance Department of the Bank is responsible for the management.

Four. Operational risk.

Operational risk refers to the risk that direct or indirect losses may result from inadequate or improper operation of internal procedures, personnel, and systems. Operational risk is more of a loss caused by human error, because all departments of the commercial bank will participate in the management of operational risk, such as credit management, accounting and settlement, market transactions and other businesses.

5. Compliance and Legal Risks.

Compliance and legal risk refers to the risk of a bank's operation and management violating laws, regulations or standards, resulting in legal sanctions, regulatory measures, property damage or reputational damage. Generally speaking, legal risk and compliance risk are involved together, but the scope of compliance risk is broader than legal risk.

Reputational risk can be divided into: known risk, unknown risk, and unknowable risk.

In addition to the traditional theory of financial risk management, in recent years, scholars such as Francis Diebold and Neil Doherty, Richard Herring and other scholars at the Wharton School of the University of Pennsylvania have developed a new set of financial risk management concepts, that is, to examine and measure financial risks from the perspective of the known, unknown and unknowable.

This risk management philosophy can also be applied to bank reputation risk management, which examines and manages bank reputation risk from the known, unknown and unknowable perspectives.

Overview of reputational risk: Refers to the source.

Reputational risk refers to the risk of loss to the intangible assets of a commercial bank due to adverse outcomes arising from unexpected events, policy adjustments, market performance or daily business activities. Commercial banks often see reputational risk as the greatest threat to their economic value. Reputational risk is also seen as a multidimensional risk.

The best way to manage reputational risk:

Strengthen the awareness of comprehensive risk management, improve corporate governance and internal control, and prepare for the reputational crisis; Ensure that other key risks are properly identified and prioritized to effectively manage. <>