The Executive Director and Chief Risk OfficerÂ of Rand Merchant Bank (RMB),Â Nigeria Limited, Peter Blenkinsop has stressed that effective management of both organisational and personal reputational risk was key to sound compliance and corporate governance for banks in Nigeria as well as any other country.
In his address titled: â€˜Managing Reputational Risk,â€™ he noted a bankâ€™s approach to managing reputational risk should be no different from managing any other risk faced by banks in the operations of their banking business.
Blenkinsop, therefore urged banks to defineÂ their reputational risk appetite by defining the boundaries of what they believe to be acceptable performance in this class of risk.
This, he said applies to product roll-out and product performance (perception versus what is actually delivered) as much as it does to behavioural aspects.
He further urged banks to pay special attention to what he called â€œvalues/character-based reputational riskâ€.
â€œIf this materialises, this leads to perceptual organisational loss or destruction of shareholder value, which ultimately leads to financial loss.
â€œThis is much more difficult to recover than financial losses as it is that â€˜silent killerâ€™ that is difficult to fully manage,â€ he added.
Blenkinsop alsoÂ stated that management of reputational damage needed to be addressed at both internal and external perceptual levels.
â€œFor sound corporate governance, all banks should work to vest an organisational culture where the board, executive management and employees align with the bankâ€™s stated values and ethical risk appetite to achieve long term business success,â€ he added.
He further urged all banks to be honest in the evaluation of their boardâ€™s and executive managementâ€™s performance in so far as reputation and ethics management was concerned, and also tasked all bank staff to be honest about their own contribution to the organisational health in this regard. Â
According toÂ Blenkinsop,Â in managing values-based reputational risk, points to ponder on in respect of externally focused risk management includes: selling products that measure up to your brand; active management of client complaints by treating clients professionally and turning their bad experiences into good experiences, and ruthlessly managing undesirable elements out the system.
Blenkinsop said further: â€œAs a compliance officer and reputational risk manager, you need to show very good personal reputational risk management before you have the credibility to assist in managing your organisationâ€™s reputational risk.â€