Managing Reputational Risk
RBS define reputational risk as “the risk of brand damage and/or financial loss due to the failure to meet stakeholder expectations of RBS’s conduct, performance and business profile. Stakeholders include customers, investors, rating agencies, employees, suppliers, government, politicians, regulators, special interest groups, consumer groups, media and the general public.”
Emerging reputational issues are identified by business franchises and functions with the Sustainability Services and Enterprise Wide Risk teams focusing on new and emerging sustainability and strategic risks respectively. The most material threats to RBS’s reputation continue to originate from historical and more recent conduct issues. As a result, RBS has been the subject of investigations and reviews by a number of its regulators, some of which have resulted in fines and public censure.
Reputational risk is of significant importance and is controlled by a governance framework, with Board-level oversight reinforced by a Reputational Risk Policy.
The Reputational Risk Policy was launched in 2015 across customer-facing businesses to improve the identification, assessment and management of customers and issues that present a reputational risk. We have strengthened governance frameworks by establishing new and enhancing existing reputational risk fora (RRF) that consider material reputational risks associated with customers, transactions, products or issues.
The most senior RBS-wide RRF which hears the most material cases comprises the Chief Risk Officer, the Chief Marketing Officer and the General Counsel. The RRF, which has delegated authority from the Executive Risk Forum, also acts as a central forum to review sector or theme-specific reputational risk policy positions (including Environmental, Social & Ethical (ESE) risk policy positions). A specialist team is responsible for developing and maintaining our reputational and ESE risk framework and assisting the business and functions on its implementation. Read more about the ESE framework.
The Risk Management Monthly Report, provided to the Executive Risk Forum and the Board Risk Committee, may also discuss reputational risks facing RBS, and the annual Strategy Report covers progress on sustainability principles.
Reputational risk is mitigated through the above governance frameworks and training of staff to ensure early identification, assessment and escalation of cases or issues with potential reputational risk.