Class Description

”All truths are easy to understand once they are discovered; the point is to discover them”

- Galileo Galilei

Course Outline

Test Video

Got a name?

Everything in this world with a ‘name’ needs to deal with Reputational risk to avoid earning a ‘bad name’.

Be it individuals like us or big brand like Apple, onus is always on the name owner to protect it with all its might.

We all feel the urge to ensure that we are perceived by the world exactly how we want them to!

But it’s easier said than done. As the very diversion in who we are and how the world perceives us, leads to risk to our image.

Maintain it!

Although, it is totally acceptable to see an entity engaged in damage control while facing image crisis. Yet, when we see a company or even politicians; actively trying to manage people’s perception about themselves; we ironically tag them as manipulative or fake.

Thus, managing reputation is not an easy task as one needs to maintain a fine balance between being manipulative to being reactive after earning bad rap.

If managing reputation is such a challenging task, then what happens when it’s a bank in question struggling with its deteriorating image in public?

Be Bankable..

While, we heavily rely on these institutions to keep our money safe & secure however, what if they lose our trust?

Wondering if it ever happened in the history of banking when people lost trust on their bank and rushed towards its branches to withdraw all their money?

Well, it happened and not just once but many times. Nations across the globe have seen banks falling due to Reputational Risk and bank run (a phenomenon when a considerable part of the bank’s customers withdraw their money at the same time due to the fear that the bank won’t fulfill its obligations).

If a bank run takes place, it doesn’t really matter whether the fear is well-founded or only based on rumors, the result will always be the same, bank failure. No bank can survive if all their customers withdraw their money at the same time. Thus, a bank run is a self-fulfilling prophecy, increases the likelihood of bank failures and destabilizes the economy.

This also explains why it is important for a bank to maintain its image of a trustworthy and sound institute as they are the flag bearers of a functional economy.

Because Reputation is Everything.

It’s not an easy task to characterize Reputation risk. We all know about it and have our own understanding on how to manage it.

For some, it is a specific risk with clear drivers and tangible business consequences, even if these are hard to quantify.

For others, it is a risk of risks that does not exist on a standalone basis.

A third perspective is that reputation risk is not a risk at all, simply an outcome of other risks.

While, these three views capture the essence of reputation risk yet a lot is left unsaid about it.

Therefore, I decided to capture all the aspects of Reputational Risk in this course and you will find that there is much more to this risk than meets the ‘naked’ eyes.

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Overview of Class

This class will take you through a journey of interesting case studies and real life stories entangled within the reputational risk concepts to ensure that the complex topics are demystified and you feel enlightened by the end the class.

We will cover the following topics in detail:

Reputational Risk - Introductory Real Life Story of 2 Banks - ‘Reputation is Everything’

- Reputational Risk Definition(s)
  - Basel Committee on the Risk
- Royal Bank of Scotland Case Study
- Reputational Risk vs Goodwill vs Strategic Risk
- Measuring Reputational Risk
  - Assessing the Risk
- Manage it well - Reap the benefits
- Where most of them go wrong
  - Managing Reputational Risk is not a ‘Crisis Management’ exercise
  - Cross-Border Issues
  - Other Challenges
- Risks from loss of good reputation
  - Factors that May Threaten Strong Reputation
  - A Good Reputation May be Destroyed Quickly
- The Need for a Formal Strategy to Manage Reputation Risk
- Case Study – SunTrust Bank
- Summary
  - REPUTATION RISK: Characteristics in a nutshell.

How Do I implement what I learnt?

You will be working on a thought provoking yet fun project.

Here are the 2 easy steps you need to follow:

If everything with a name needs to manage its reputation then nations should be no different!

Pick any country of your choice and do the following:

Shortlist 2 actions taken by your choice of country in last 100 years that you believe were good example of reputation management. Try not to pick the country you belong to; so we can learn to find good in others!
Write those 2 actions (on a pic) in the following manner:

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Hi,

This is [country name].

In last 100 years, [country name]

[action 1] and [action 2].

[country name] is good at managing its reputation by [reason]

Be like [country name].

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Here is an imaginary example:

Hi,

This is United States of China (USC).

In last 100 years, USC once sent Heart Surgeons to Pluto to conduct bypass surgery on an alien.

And It also fought for equal voting rights for males on female dominated Venus.

The USC is good at managing its reputation by helping other planets.

Be like USC.

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Feel free to add your own creativity in the meme but the country you choose should be real and from Earth. And their actions shouldn't be imaginary either. Good luck and let the fun begin!

Course Outline

Sanjeev Kaushik

Lifelong student of Banking & Finance.

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