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lot of correlation there.”
But the measure is limited, Delon adds. It is more appropri-
ate for large, publicly-traded firms than those of smaller, pri- vately-owned companies.
And so how can you quantify a reputational loss?
It’s still relatively early days in the effort to assign numbers to the risk for the purpose of determining an insurance payout. For Eskins, the question is: “Can we as an industry come to a meeting of the minds as to how we quantify this risk? Assum- ing the answer is yes, we can absolutely create a viable prod- uct, because then we can agree to a pricing framework.”
Fox notes that enterprise risk managers have been doing work on this since 2013. The Reputation Institute, for exam- ple, offers an index of corporate reputations based on seven different factors: products and services, innovation, work- place, citizenship, governance, leadership, and performance. A 2014 RIMS paper, Managing Reputational Risk to Drive Strate- gic Performance, identifies metrics that can be used to measure the impact of each factor:
• Products and services (customer satisfaction surveys, quality metrics, consumer complaints/feedback, management responses, cycle time, percent of work done by suppliers)
• Innovation (analyst ratings, consumer attitude scanning, me- dia mentions, percentage of time spent on new products and ser-
vices, number of patents, awards from professional associations) • Workplace (employee engagement surveys, compensation
benchmarking, safety reports)
• Citizenship (social media ratings [e.g. Yelp], corporate so-
cial responsibility ratings, community engagement surveys)
• Governance (Institutional Shareholder Services Quick- score, Governance Metrics International (GMI), bond/credit
ratings agencies)
• Leadership (credit rating agencies, analyst reports, em-
ployee engagement surveys)
• Performance (market share, margins, sales, financial re-
sults, budget performance, deviation analysis).
The list of factors is not exhaustive, Fox says. “We looked at
those items and we thought there is more than that. There is also the perceptions of an organization by external partners, creditors, regulators, industry and media. You can have a stel- lar reputation, for example, but if someone in your industry does something that gets a lot of negative press, that can affect the entire industry. It’s hard to quantify each of those dimen- sionsandthencomeupwithanoverallscore.”
Organizations are beginning to put the numbers together, “but it’s baby steps,” says Fox. “I haven’t seen anybody look at this against all of these dimensions. They may just pick a few that they think are important to their organizations. At least
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