Cyber rises to become top reputational risk for corporates

Cyberattacks trended as the top reputational risk for 65% of corporates, according to a global poll by Willis, usurping environmental concerns – although that followed closely in second place at 64%. In a survey of 500 global senior executives asked to name their top five reputational risks in autumn 2024, Willis says more firms are now more aware of how system failures can damage their reputation. In its third year, the survey tracks an increase in concern about cyber risks, rising from 24% in the 2023 survey to 65% today. “Geopolitical tensions and instability can heighten cyber risk, resulting in more frequent and sophisticated attacks,” the report says. Environmental risks also triggered greater concerns about harm to corporate reputations in the latest poll, up from 52% in 2023, while governance and social impacts also increased as reputation risk factors. “Despite pushback against the ESG agenda, regulations continue to tighten in many jurisdictions, leading to heightened reputational concerns,” Willis says. “For many businesses and brands, managing their reputation has become something of a tightrope walk as accepted positions on issues such as diversity and sustainability become contentious areas.” The poll also reveals that fewer firms are able to model the financial impact of a reputational event, with 64% claiming their organisation has a moderate ability to calculate the potential loss, compared with 74% in 2023 and 87% in 2022. Just 11% say they have a great deal of capability to model the financial impact of an event. However, the vast majority of businesses (94%) have some level of reserved budget set aside to help deal with a damaging reputational event. David Bennett, head of reputational risk management, direct and facultative at Willis, said: “The results of the survey show that while crisis response teams are more robust than ever, modelling capabilities still lag. In today’s unpredictable environment, the ability to anticipate and assess costs and liabilities is becoming increasingly critical.” He added that while reputation has traditionally been viewed as intangible and difficult to quantify, advances in AI-powered platforms “enables organisations to monitor real-time sentiment and model the frequency, severity, and potential sources of reputational threats with greater precision than ever before”. The poll reveals that 86% of businesses surveyed have a formal process in place for assessing and managing reputational risks, with 22% linking to board key performance indicators, up from 14% in 2023, while 91% also carry out annual exercises to test their crisis communications plan. Garret Gaughan, managing director, direct and facultative at Willis, said: “Leading businesses are managing reputation as an operational and financial risk, and have moved away from viewing it as a branding exercise, with some even linking reputation to board KPIs.” The majority (57%) say they would accept a degree of reputational risk if they thought it was worth it or the activity or association was the right fit. More than two-thirds (69%) say they assess such situations on a case-by-case basis. As the reputational risk landscape shifts, Gaughan says firms should build resilience through strong and proactive risk management processes, including sentiment tracking and risk intelligence, as well as procedures to sign off all campaigns and associations, and conducting regular reputational risk assessments.

Cyber rises to become top reputational risk for corporates

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