Reputational risk is a hidden danger that can pose a threat to a company resulting in lost revenue or increased costs.
At its most destructive it can wipe out millions of pounds in market capitalisation and can result in significant changes to the management structure. Arguably a lot of problems can be mitigated by strong board oversight of strategy, policy and effective corporate governance.
One of the areas which repeatedly features as a possible threat is in third party outsourcing. Indisputably, there are benefits to outsourcing – lower costs to heightened efficiency and a sharpened focus on core business objectives. However, without strong safeguards and controls in place, exposure to fiscal, operational, regulatory and reputational risks are enhanced. With expertise in third party management risk programmes, Rockstead is well positioned to offer the independent oversight needed in these areas.
The recent introduction of the Senior Managers Regime (SMR) further highlights the need for companies in the financial services sector to focus on improving risk management practices and operations.
The individuals in control of key functions, such as risk management, compliance, internal audit and information technology will become more accountable for rule breaches. In order to be compliant, a firm will need to develop and implement a “responsibility map”, setting out the specific responsibilities of each manager. Additionally, internal rules and processes will need to be robust and “fit for purpose”.
In an ever changing regulatory environment, reputational damage to business can be significant and must not be under-estimated. Independent support can ease the burden, provide an early warning system, allowing management to concentrate on the “day to day” running of the organisation.
We have an experienced team of business review specialists ready to help with third party reviews or SMR implementation.