Himagiri Foods Ltd., a well-established food retail chain in Chennai having turnover more than ₹ 1000 crore, operates both online and offline through more than 200 outlets, including restaurants and sweet shops across In

Himagiri Foods Ltd., a well-established food retail chain in Chennai having turnover more than ₹ 1000 crore, operates both online and offline through more than 200 outlets, including restaurants and sweet shops across India. The operations of the Company have been growing considerably over the last few years. The management is trying to corporatise its style of functioning and planning to implement processes and controls for better operations. One of the major issues which the Company faces is managing the quality of raw materials and storage of finished items, considering the short shelf life of its products. Recently, the Company faced a major crisis due to non-compliance with legal and quality standards. An inspection was conducted by government agencies in five locations across Chennai, wherein several lapses were noted. The government survey conducted by the state's food and labour departments uncovered several violations, including: Adulteration and failed quality tests of sweets and milk products Employment of child labour Non-registration with authorities under Labour laws, Provident Fund and ESI Failure to maintain testing laboratory Failure to adhere housekeeping norms relating to display and maintenance of records etc. under FSSAI regulations. Print and electronic media have caught attention of the public. Many clips and reels of the inspection coverage were being circulated on social media and many food influencers have called for boycotting the Company's products. The Company has paid huge fines and lost reputation in the market. Company's management has been forced to shut several outlets. These infractions have resulted in huge financial loss, significant media backlash, and reputational damage impacting its market position and customer trust. Company's management has called for a high-level management meeting to design a strategy to address the present crisis. One of the senior managers from Finance team indicated that the crisis arose due to lack of risk management. The Company should appoint a professional who would provide a robust list of potential risks that can have an impact on the business. Once such risks are identified, controls can be designed to address them. Renu, a Company Secretary and risk management professional has been appointed by the Company to provide a comprehensive risk management plan. In the background of above facts, answer the following: Explain 'reputation risk' and outline the principles to manage reputation risk.