Public companies need more effective risk strategies to protect their reputations, according to Dr Deborah Pretty, an expert in corporate risk management.
Recent research by Dr Pretty, principal of Oxford Metrica, shows that reputation contributes a “substantial” amount of value to the share price of Europe's top 500 companies.
“The higher share prices enjoyed by firms with strong reputations is mutually reinforcing,” she said.
“A virtuous circle results through the generation of reputation and value.”
Alternatively, she has found that crises which affected a company's reputation often had a knock-on effect on its share price.
Dr Pretty will reveal the full findings of her research at Airmic's annual conference in June.
She will refer to recent case studies such as the Concorde air disaster in Paris last July and Firestone's tyre recall in the US last year.
“The results of these demonstrate clearly the need for an enterprise risk strategy that is both comprehensive and firmly linked to shareholder value,” Dr Pretty said.
Oxford Metrica is an independent risk management consultancy, specialising in risk, value, reputation and governance.