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Social media amplifies reputation damage: Aon

Cyber attacks have a direct impact on share prices, a new report by Aon and Pentland Analytics says.

The study – Reputation Risk in the Cyber Age – examined 125 “reputation events” in the past decade, measuring the impact on shareholder value over the following year.

Since the introduction of social media, that impact has doubled. And the size of a company and strength of its reputation does little to protect it.

“Although risk management awareness and tools have evolved, reputation risk continues to weigh on corporate executives as one of their leading concerns,” Aon Enterprise Client Leader Randy Nornes said.

“Savvy companies that develop and use a robust risk management framework can not only better navigate reputation events, but can often see a net gain in value post-event.”

The study found that, at times of crisis, investors use information found on social media to reassess their expectations of a company’s future cash flow.

Companies can add 20% of value or lose up to 30% depending on their reputation risk preparedness and management behaviour after a crisis.

The study identifies key drivers of successful recovery from a reputation event, including: instant and global crisis communications; maintaining perceptions of honesty and transparency; active social responsibility.

“New technologies continue to emerge such as robotics, artificial intelligence and bionics, all requiring constant vigilance,” Pentland Analytics founding director Deborah Pretty said.

“Technological developments have heightened reputation risk by making it easier, cheaper and faster for people to spread news.”

To access the report, click here.