Today, businesses are more exposed to reputational risk than at any other point in history. The rise of social media, fractious and nationalist geopolitics, and growing investor and consumer activism, can see crises evolve in a viral trend. Negative perceptions can have a large financial impact on a firm and can arise from any situation in which a firm is involved, or from events where they are not involved but where investors or consumers are pressuring them to act.
A report from the Economist Intelligence Unit cited the example of SoftBank Group´s (Japan) share price fall (8% in a single day) following the murder of US-based Saudi journalist, Jamal Khashoggi in October 2018, because investors were concerned about Saudi investment in the Group´s Vision Fund. Early preparation of reputational recovery is therefore critical when identifying situations that can affect a business´s perception and financial health. Not all is about reputational management but it helps.
Report by The Economist Intelligence Unit: