Reputational Risk Management in Financial Institutions
First published:
ISBN: 9781782721017
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Reputational Risk: A Short Introduction
David Shirreff
Introduction
Reputational Risk: A Short Introduction
What History Teaches Bankers about Reputation Management
An Asset–Liability View of Banks’ Reputation
Reputational Risk in the Universe of Risks: Boundary Issues
Corporate Governance Changes Following Reputational Damage in the Financial Industry
Reputational Risk and Prudential Regulation
Managing Stakeholder Expectations
Environmental and Social Risks from the Perspective of Reputational Risk
The Relationship between Reputational Risk Management and Business Continuity
Tracking Reputation and the Management of Perception at UniCredit
Successful Recovery from Reputational Crises: Legitimate versus Illegitimate Risk Case Studies
Reputational Risk Management Across the World: A Survey of Current Practices
Governance as the Starting Point for a Reputational Risk-Management Process
Managing Reputational Risk in a Major European Banking Group
The Implementation of the UniCredit Group Approach
Promotional Banks: An Introduction to Reputational Risk Management
Reputational Risk Management in a Global Insurance Company
Reputational Consequence Management: The Future
Loss of reputation can kill a bank. It may not happen overnight, but, unless prompt and comprehensive action is taken, the damage takes hold and is soon irreversible. Let us look at two examples from ancient history.
NatWest Markets was the investment-banking arm of NatWest (now part of the Royal Bank of Scotland – RBS). In 1997 the investment bankers suffered severe losses in long-term interest-rate derivatives because of poor risk management. The way the news came out, and the poor response of senior managers to a clear loss of reputation, resulted in the closure of the investment bank, and, within three years, the sale of NatWest to RBS.
Union Bank of Switzerland (not to be confused with today’s UBS) prided itself on being one of the top global investment banks. Also in 1997, it misjudged the risk on long-term equity derivatives and ran up losses of around US$1 billion. The entire risk-management culture of the firm was below standard and failed to adjust sufficiently and convincingly following the loss. Within months the bank was taken over by its smaller rival, Swiss Bank Corporation. The merged bank was renamed UBS.
These are extreme cases. Usually banks that take a hit to
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