DCRO Institute unveils reputation risk governance principles
The DCRO Institute has released Guiding Principles for Reputation Risk Governance: Essential principles for boards of directors.
According to the Institute it offers a practical foundation for board-level oversight of risk to the mission-critical asset of reputation. The framework includes ten principles connecting reputation risk governance to operations, stakeholder expectations, and the modern threat landscape including cyber and geopolitical risks.
Reputation shapes stakeholders’ choices for buying, working, investing, lending, and enforcing that create enterprise value; reputation risk is that they will shift their choices. The Guiding Principles add a structured governance perspective to reputation risk.
The DCRO Institute said that the principles are a ‘timely addition’ as firms struggle with trust in the face of a 24/7 media cycle amplifying emotionally charged political discourse over conflicting stakeholder expectations. These Principles offer corporate directors both a practical framework for protecting a firm’s financial resilience, and a board’s personal financial well-being.
“Warren Buffett’s threat of being ruthless over a shred of lost reputation has boomeranged onto directors with consequences ranging from personal humiliation to ‘being voted off the island,’” said Nir Kossovsky, chief executive of reputation insurer Steel City Re and a member of the DCRO Institute Reputation Risk Governance Council that drafted the Guiding Principles. “These Principles help directors avoid claims of culpability from activists, institutional investors and litigators that can create costly personal reputation losses that are not covered by D&O liability insurance.”
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