What is Reputation Risk? How is it managed ?

Reputation risk is a type of non-financial risk arising from negative perception on the part of customers, counterparties, shareholders, investors, debt holders, market analysts, other relevant parties or regulators that can adversely affect an entity's ability to maintain existing, or establish new, business relationships and continued access to sources of funding. This type of risk is multi-dimensional and reflects the perception of other market participants. Exposure to reputational risk is essentially a function of the adequacy of the entity's internal risk management processes, as well as the manner and efficiency with which the management responds to external influences on entity's related transactions. Reputational risk can be managed based on the following principles: Integration of risk while formulating business strategy. Effective board oversight. Image building through effective communication. Promoting compliance culture to have good governance. Persistently following up the corporate values. Due care, interaction and feedback from the stakeholders. Strong internal checks and controls. Peer review and evaluating the company's performance. Quality report/ newsletter publications. Cultural alignments.