Reputation Risk Enters the Electronic Age

When viewing all the risks that companies face today, you see that one of the most severe is certainly the risk to a company's reputation. Whether it is simply perception or fact, when a company's reputation is questioned, the impact can be devastating and difficult to remedy. This risk recently has become even more severe with the speed and ease of information access via the Internet. In our new YouTube and Facebook society, we all know the potential for the unintended widespread release of information that may be considered private. Now, that same sort of issue may impact companies through the potential release of private information through sources such as WikiLeaks.

Julian Assange, the widely known founder of WikiLeaks, announced that he intended to “take down” a major American bank and reveal an “ecosystem of corruption” with a cache of data from an executive's hard drive, according to a recent article in the New York Times. The suspicion in the financial services community was that the bank in question was Bank of America. As a result, Bank of America's shares fell 3 percent in value the day following the announcement. Bank of America is taking the threat very seriously and is working to determine if WikiLeaks may have damaging information regarding the company. Even if it turns out that Bank of America is not the bank in question, the mere suspicion resulted in significant damage to the company's reputation.

Going forward, companies must be ever vigilant of potential threats such as these. The best defense for these threats is to be proactive by cultivating an ethical corporate culture and placing reputation at the top of the list when it comes to managing risk. ###

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