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Banking on trust: managing reputation risk in financial service organizations

Scott, Susan V. ORCID: 0000-0002-8775-9364 and Walsham, Geoff (2002) Banking on trust: managing reputation risk in financial service organizations. LSE Working paper series (117). Department of Information Systems, London School of Economics and Political Science, London, UK.

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In this paper we introduce concepts that build a theoretical notion of reputation risk and establish the need to extend our approach to managing such risk.. The existing literature on reputation risk has tended to be reactive and focus on immediate business threats rather than trying to understand cumulative or constituent processes surrounding trust relationships. We explore the notion of ‘active trust’ as a way of redesigning approaches to the management of risk. Our analysis focuses upon distinctive contemporary issues that illuminate the shifting relationships between financial service organizations and their stakeholders: namely the issues of governance, customer service and staff retention. Although part of the analysis concentrates on controversy and breakdown, risks can also induce opportunities; situations that are often viewed as corrosive may present an occasion for creative management. We suggest that proactive reputation risk policies and practices are needed that extend organizational vision beyond the boundaries of the firm to consider the implications of key societal developments.

Item Type: Monograph (Working Paper)
Official URL:
Additional Information: © 2002 The Authors
Divisions: Management
Centre for Economic Performance
Centre for Analysis of Risk & Regulation
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD61 Risk Management
H Social Sciences > HE Transportation and Communications
H Social Sciences > HG Finance
T Technology > T Technology (General)
JEL classification: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search; Learning; Information and Knowledge; Communication; Belief
G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L14 - Transactional Relationships; Contracts and Reputation; Networks
Date Deposited: 07 Apr 2011 15:34
Last Modified: 16 May 2024 11:28

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