Implications of Reputational Risk

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SIG University Certified Third-Party Risk Management Professional (C3PRMP) program graduate Meshkat Rahman shares her systematic analysis of Reputational Risk with a methodical solution design process.

I have decided to partake in the certification of the C3PRMP course by SIG University as I have a growing passion for the topic of third-party risk management. I have learned various aspects of vendor risk management, which includes the types of risk, how to identify risks and their remediation plan, the importance of RACI and the role of various stakeholders, industry trends, and best practices. The list will go on. With this in-depth knowledge gained via this course, I can demonstrate a high proficiency level in the topic I am most passionate about. This will help me help my clients and my company in the future.

One of the topics that can be deemed simple and self-explanatory but possess a high value is reputational risk. In this article, I would like to dive deep into the topic of reputational risk and discuss its implications and how to apply the knowledge gained from this course in an organization. 

When defining reputation, it essentially means the brand, comprising the explicit and implicit key values. It is a result of the expectation of the customers and the norms. Reputational risk has become a topmost strategic risk. It arises from the likely harm or damage stemming from the actions or behaviors of its third-party vendors or customers. In this highly connected world, when a company interacts with an external party, its actions will likely influence its reputation directly or indirectly. Reputation is very delicate and crucial in today’s world, and it should be treated as a “priceless asset.” Therefore, the course mentioned that “reputation should be measured, monitored, and understood as part of the holistic program.”

Risk identification is an important step in the reputational risk analysis. It consists of understanding the potential events, acts, or conditions that can negatively affect the company’s reputation. 

This course gave a fruitful understanding of the in and out of reputational risk. Additionally, the articles and the book provided for the course also helped in gaining vast knowledge. This brings us to the point of addressing key stages of the risk identification process:

  • Analyzing the stakeholders: It is vital to understand and examine the expectations of the external and internal parties. This includes consumers, employees, vendors, suppliers, contractors, the public, etc. Analyzing their opinions and concerns will help categorize the reputation risk that may arise if their expectations are unmet.
  • Monitoring the environment: This will help classify emerging trends and industry-specific risks. A company can identify potential reputational risks by keeping track of social media communications and industry and regulatory reports.
  • Internal assessment: The company should also conduct internal assessments to evaluate its internal processes and operations.
  • Third-party risk assessment: Assessing the reputation and the consistency of the vendors or suppliers is very important. This includes quality measures, ethical applications, financial stability, etc.
  • Scenario analysis: Scenario analysis seems super straightforward, but it brings immense value by imagining and creating hypothetical situations and finding strategies to mitigate the potential reputational risks

Now that the risk identification process has been covered, it is important to understand the risk mitigation strategies and techniques an organization should consider. Here are some of the pointers below:

  • Extensive due diligence: It should be the first starting point to conduct thorough due diligence on the vendors before engaging in a business. It is also important to perform background checks and site visits.
  • Transparent contract agreement: A clear and transparent contract that includes clauses concerning reputational risks, compliance, and data protection are ways to mitigate potential risks.
  • Regular monitoring and audit trails: Conducting constant audits and having a strong monitoring system to track vendors’ activities are other ways to meet the industry regulatory standards and be aware of misleading reputational risks.
  • Contingency planning: Creating scenario analysis and a full contingency plan will help handle reputational risks concerning third-party vendors.

To conclude, it can be understood from the course by SIG University that “reputation is directly linked to a company’s revenue.” Thus, having a reputational issue can have the biggest effect on revenue and brand value. Reputational risk management is continuous, and all external and internal stakeholders should actively participate. The first step is risk identification, which must be monitored, controlled, analyzed, and adapted. After the identification phase is completed, various strategies and techniques should be executed. This is how one can develop their ability to identify, prevent and alleviate reputational risks concerning external vendor relationships.

SIG University's Certified Third-Party Risk Management Professional (C3PRMP) program is a globally recognized certification that is the “gold standard” in terms of relevance, scope and content. The C3PRMP program was created by Linda Tuck Chapman, an advisor, educator, author and expert.


Meshkat Rahman, Senior Consultant in Risk Advisory, Deloitte

My name is Meshkat Rahman, and I am a Senior Consultant at a multinational company located in Germany. I have gained 2 years of experience within the broader topic of Vendor Risk Management and Contract Lifecycle Management. During the past two years, I have developed process enhancements of third-party risk management and contract lifecycle procedures, implemented an optimization process, and instrumented solutions for data quality issues regarding third-party risk management, to name a few. Before I embarked on my career phase of life, I have completed my Bachelor’s and Master’s degree in International Business Management, focusing on Corporate Governance and Marketing.