RegulationAccounting StandardsDirectors putting reputation before profit

Directors putting reputation before profit

Joint CIMA and AICPA survey reveals directors prepared to lose profit for the sake of protecting reputation

REPUATATIONAL RISK is now seen as a critical company-wide concern with three quarters of finance leaders claiming their company was prepared to lose profit in the short term for the sake of protecting its long-term reputation.

According to a joint CIMA and AICPA survey of more than 1,300 finance professionals, more emphasis is being placed on reputational risk than in previous years, while almost half said they had rejected a project that made financial sense because the reputational risk was too great.

Respondents identified the demand for more transparency, competitor reputational failures and the rise in social media channels as contributing factors to the increased global interest on the topic.

Despite this, over 95% of organisations surveyed admitted to not always using feedback from these channels to help them anticipate and manage risk to their reputation. Similarly, 62% of those surveyed had no formal processes or models in place for calculating the financial impact of not managing reputational risk.

Tanya Barman, head of ethics at CIMA said: “Organisations are increasingly recognising the need to take reputational risks very seriously if potential crises are not to turn into catastrophes.

“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.”

Related Articles

Settlement reached between Margaret May and CIMA

Accounting Standards Settlement reached between Margaret May and CIMA

9m Stephanie Wix, Writer
CIMA opens door to CIPFA members

Accounting Standards CIMA opens door to CIPFA members

11m Stephanie Wix, Writer
Take part in our ‘Seven Days in Accountancy’ quiz

Accounting Firms Take part in our ‘Seven Days in Accountancy’ quiz

1y Fraser Simpson, Reporter
CIMA appoints new president

Accounting Standards CIMA appoints new president

2y Beth Abel, Reporter
CIMA members face 5% subs hike as institute seeks move

Accounting Standards CIMA members face 5% subs hike as institute seeks move

3y Kevin Reed, Writer
CIMA elect former PwC partner Miskin as president

Accounting Standards CIMA elect former PwC partner Miskin as president

1y Fraser Simpson, Reporter
CIMA outlines contributors to bad decision making in business

Accounting Standards CIMA outlines contributors to bad decision making in business

2y Richard Crump, Writer
Tilley: CIMA focus will remain despite new global association

Accounting Standards Tilley: CIMA focus will remain despite new global association

2y Kevin Reed, Writer