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About the survey

A total of 269 senior risk managers participated in our survey on risk and reputation. The survey was conducted in October 2005, and our thanks are due to all those who shared their time and insights.

How significant a threat do the following risks pose to your company’s global business operation today? (Index score, where 100 = highest)

Reputational risk (eg, events that undermine public trust in your products or brand) 52

Regulatory risk (problems caused by new or existing regulations) 41

Human capital risks (eg, skills shortages, succession issues, loss of key personnel) 41

IT network risk (eg, network security breaches, IT systems failure) 35

Market risk (risk that the market value of assets will fall) 32

Credit risk (risk of bad debt) 29

Country risk (problems of operating in a particular location) 22

Financing risk (difficulty raising finance) 21

Terrorism 19

Foreign exchange risk (risk that exchange rates may worsen) 18

Natural hazard risk (eg, hurricanes, earthquakes) 18

Political risk (danger of a change of government) 18

Crime and physical security 15

Do you view threats to your company’s reputation as: (% respondents)

A category of risk in its own right 52

Something that arises as a consequence of a variety of other risks 48

APPENDIX Reputation: Risk of risks

How large an impact is each of the following factors likely to have in prompting an increased focus on reputational risk within your company? (Index score, where 100 = highest)

Reputation is becoming a key source of competitive advantage as products/ services become less differentiated 59

Faster dissemination of ‘bad news’ through global media/ communication channels

51

Higher standards of governance imposed by regulators 43

Customers readier and more able to switch suppliers than ever 39

Increased willingness of governments to intervene in business on issues of public concern 33

Customers‘ increased focus on buying from ethical suppliers 26

Increased targeting of companies by pressure groups 24

Other

19

To what extent are the following actions a source of reputational risk for your organisation? (% respondents)

Major

Minor

Non-compliance with regulation/legal obligations

66

53

Exposure of unethical practices

58 52

Security breaches (eg, sensitive data leaks, hacking of customer financial data)

57 43

Failure to deliver minimum standards of service and product quality to customers

47 62

Poor crisis management

40 41

Failure to hit financial performance targets

34 25

Risk by association with suppliers, partners, alliances, etc with poor reputations

34 36

Failure to address issues of public concern pro-actively (eg, climate change)

14 24

Environmental breaches 14

25

Labour unrest 11

18

Other 4

9

© The Economist Intelligence Unit 2005

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