Who would have imagined? At a time when the Dow Jones Industrial Average climbs above 15,000 for the first time and investor euphoria persists, trust in companies and their CEOs ranks near or at record lows. In this case, "rank" can serve as an adjective, too. Investors even have turned against the CEO who once could do no wrong, JP Morgan Chase's Jamie Dimon, urging him to surrender one of his roles as chairman and CEO because of some celebrated gaffes.
These corporate governance issues and crises have sparked a steep rise in reputational risk as trust in business continues a decade-long erosion. And good business practices alone won't remedy it. Challenges to a company's reputation arise from a specific business decision or practice. To manage that reputation successfully requires the active leadership of the CEO with the board of directors serving as avid monitors.
They must ensure that the reputation risk-management process becomes integrated deeply within the business. This requires an enterprise-wide capability. What triggered the unusual paradox we're in? Four principle factors have contributed to the sharp increase in reputational risk: