UAE companies understand that reputation is more expensive than money
CGMA research finds reputational risk is an increasing concern amongst financial leaders.
“Once the sole remit of the marketing and PR departments, reputational risk is now seen as a critical company-wide concern, according to a global survey by the Chartered Institute of Management Accountants (CIMA) and the American Institute of CPAs (AICPA),” said a press statement.
The survey of UAE finance leaders who hold the Chartered Global Management Accountant (CGMA) designation identified the demand for more transparency, competitor reputational failures and the rise in social media channels such as Facebook, Twitter and LinkedIn as key contributing factors to the increased global interest on the topic, it said.
Despite this, only 47 per cent of organisations surveyed said that they use feedback from these channels to help them anticipate and manage risk to their reputation to some degree. Similarly, 47 per cent of those surveyed had no formal processes or models in place for calculating the financial impact of not managing reputational risk, it added.
Geetu Ahuja, Head of GCC Middle East at CIMA said, "Organisations are increasingly recognising the need to take reputational risks very seriously if potential crises are not to turn into catastrophes. After all, 20 per cent of businesses surveyed admitted to experiencing reputational failure in the past and the widespread use of the internet and social media casts a harsher spotlight than before. However, what is very worrying is the revelation that businesses still appear to be struggling with how they go about managing non-financial reporting in this area. "In order to be fully protected, it is vital for finance directors and leaders to start moving away from focusing primarily on the short term and to begin collecting, reporting and monitoring reputational risk information. This will not only enable them to performance manage an important aspect of their business, but will also be crucial for long term sustainability and helping to maximise opportunities and to minimise risk."
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