DUBAI — 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).



The survey of GCC 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.



Despite this, nearly 70 percent of organizations surveyed admitted to not always using feedback from these channels to help them anticipate and manage risk to their reputation. Similarly, 52 percent of those surveyed had no formal processes or models in place for calculating the financial impact of not managing reputational risk.



Geetu Ahuja, Head of GCC-Middle East at CIMA said: “Organizations are increasingly recognizing the need to take reputational risks very seriously if potential crises are not to turn into catastrophes. After all, nearly 20 percent 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.”



CGMA business experts make up the world’s largest community of management accountants and guide business decisions across the globe, including 95 of the world’s top 100 brands and 91 of the Fortune 100. They hold senior positions, including CEO, CFO, and Finance Director, and have a broad perspective on the long-term prospects of their organisations, their markets and their regions. — SG