From the course: Introduction to Risk Management

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Reputational risk

Reputational risk

From the course: Introduction to Risk Management

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Reputational risk

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- When customers decide to use a bank for their products or services, they are putting trust into that bank, trust that the bank will treat them fairly and trust that the bank will do everything it can to protect them and their assets. When shareholders invest in a bank, they do so on the basis that they expect employees to behave in a way that doesn't put their investment at risk. When other banks do business with the bank, they are doing so on the basis that they expect that bank to fulfill their commitments and that employees will not behave in a way which jeopardizes those commitments. Trust is built up over a period of time through a bank consistently meeting its financial obligations and constantly protecting its clients while offering them a good service. In doing so, a bank enhances its reputation amongst its stakeholders, such as customers, shareholders, and regulators. A positive reputation has many benefits for a bank. It attracts new customers and helps to keep existing…

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