- Hayne Royal Commission causes rising concern about the risk of regulatory investigations, most acute among financial services respondents
- Cyber risk (including data privacy breaches), corporate governance, and health and safety are other key risk concerns
- Growing intensity of concern about workplace reputational issues and greater willingness to identify and mitigate against the key drivers
- 'Importance of ethics and conduct in the workplace' and 'disruptive innovation' two future trends predicted to have the greatest impact on an organisation's reputation.
- Large inconsistency in respondents' ability to assess and improve their own workplace culture
Global law firm Norton Rose Fulbright today released its second Reputational Risk Australia report, which revealed that private and public organisations have grown more sensitive to workplace risk, and are doing more to identify and measure reputational issues in the year of the Hayne Royal Commission.
The firm surveyed 132 leaders across business and government between August and September 2019 to further its understanding of what reputational risk means to today's organisations.
The results showed that leaders have become more concerned about the long-term impacts of mishandling their organisation's reputation, such as the erosion of brand equity, than the more short-term top concern – the immediate consequences and costs of a scandal – that they reported in our first Reputational Risk Australia report in 2017.
This is a sign that major organisations are now treating reputational risk as a long-term, strategic issue, which is supported by other findings that show that responsibility for reputation is being spread amongst more leadership roles and functions than just the chief executive; and that more organisations have established crisis management committees and protocols, and run regular risk training and audits.
Norton Rose Fulbright head of employment and labour in Australia, Jason Noakes, commented:
"Our survey results clearly show a growing intensity of concern about workplace reputational issues, which reflects what we're hearing from many of our clients. Major organisations are becoming both more sensitive to reputational risk and more willing to identify its key drivers. These concerns are likely to persist into 2020. We also agree with respondents' top prediction that 'the importance of ethics and conduct in the workplace' is most likely to have the greatest impact on organisational reputation in the coming years."
Norton Rose Fulbright head of risk advisory in Australia, Scott Atkins, commented:
"The risk focus of financial services entities is quite expected as they continue to seek to proactively identify and address financial risks with regulators following the Hayne Royal Commission. But the greater significance of the survey results is their reflection of the rapidly evolving non-financial risks that now face companies and their directors across multiple industries and sectors. We have seen these risks manifest especially in climate, cybersecurity, privacy and employment settings throughout 2019 and these risks in turn have sparked the interest of litigation funders, a trend that is likely to expand the class action risk (along with continued enforcement action from regulators) for entities into 2020 and beyond.
"Incorporating board-driven forward-thinking, holistic risk assessment and mitigation measures is now a major focus of many of our clients in response to this complex new regulatory and risk framework. This is encouraging because failure to positively address these emerging industry risks will have significant reputational, and ultimately financial and litigation implications, for both companies and individual officers."
The full findings of the Reputational Risk Australia 2019 Survey Report can be accessed on our website here.
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