It finds that 74 per cent of UK board members see reputational damage as the most worrying consequence of an incident or scandal, ranking it as more serious than the potential direct financial costs, loss of business contracts and even impact on share price – this compares with a global average of 57 per cent.
Furthermore, 56 per cent of UK respondents now cite reputation risk among the top three risk categories they are currently focused on, topped only by financial risks such as funding issues and breach of financial covenants.
Findings reveal a boost to risk management in the UK with 82 per cent of local board members seeing an increase in financial investment over the past two years and 74 per cent citing an increase in the time invested.
At the same time, an over-emphasis on risk management may be inhibiting business growth, with a third of UK respondents expressing this concern.
UK businesses are taking a broader approach to risk management too, encompassing more contentious issues such as tax and pay. Moreover, 27 per cent are significantly concerned about an incident or scandal arising relating to tax, compared with a global average of 21 per cent , and only ten per cent in the US. This suggests UK board members are among the worlds most concerned when it comes to reputation risk surrounding tax.
Remuneration is also under scrutiny, with 32 per cent of UK respondents saying that the possibility of brand damage has led to changes to executive pay.