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As I ride this morning on a train to Washington DC to speak to a gathering of U.S. government risk management professionals about (what else?) reputation risk in the context of enterprise risk management, I can’t help but to make a few comments about the importance of proper and effective reputation risk management for any and all types of organization — from privately held family businesses to large government agencies. This is especially so in the context of the fraught and polarized times in which we are living in some of our democracies and, in particular, in the United States at this very moment – the day before one of the most confusing and difficult presidential campaigns of our lifetimes. I hope the following helps to bring some rationality into the picture and inspire us to think about reputation risk management in the governmental context as a step toward reputation opportunity management as well. Why is reputation risk management so important? We live in the hyper-transparent and super-connected age of social and other media and governments and political leaders suffer the consequences (good, bad or ugly) as much or more than the average person and company. In such an age, reputation risk acts as an amplifier of your underlying risks – and if you are able to know and prepare for your risks you can also manage reputation opportunity and value creation.
Here are the basics which apply to any form of entity – including large government agencies (not only in the US but anywhere): 1. First and foremost, effective and customized enterprise risk managementis a foundation of good risk management for any type of entity – that goes without saying. 2. Next, talented risk managers and professionals capable of gathering all relevant data to garner a robust view of relevant risks 3. A team that is empowered and enabled by leadership – whether the CEO and board or the agency leader/minister/secretary 4. A broad view that encompasses all relevant buckets of risk — from financial to operational from specific to the entity to generic — and understanding which one’s rise to the level of your strategy – i.e., strategic risks
5. For the government, stakeholder analysis will be a little different than that of the typical private sector companies or NGOs. Who are the government’s stakeholders? Each agency will have a slightly different selection but amongst them will always be the citizens of the country and those most directly affected by the government agency’s mandate: for example, while the generic stakeholders of the U.S. Veterans Affairs agency will be all U.S. citizens, the most directly relevant will be veterans, their families and those who will one day become veterans.
6. Applying the reputation risk lens – once you know what your relevant risks are, especially the strategic one’s, it is essential to apply the additional layer of reputation risk analysis – this entails having a keen sense of who your main stakeholders are. The benefits of having these foundational and essential elements in a government agency risk management program are crystal clear: You will be able to garner a holistic and strategic view of your risksand the reputation risks associated with them – and thereby manage and meet your stakeholders’ expectations betterand even create more opportunity and value for them. For much more on these concepts as they apply to all kinds of entities, please see the following resources:
  • The Reputation Risk Handbook: Surviving and Thriving in the Age of Hyper-Transparency (UK: Greenleaf Publishing 2014) http://bit.ly/1284TMR
  • El Manual de Riesgo Reputacional: Sobrevivir y Prosperar en la Era de la Hipertransparencia (Spain: Biblioteca Corporate Excellence 2016) http://bit.ly/2eToJWg
  • Reputation risk and opportunity building resources: http://bit.ly/1LYqQjM


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