Reputational risk is the risk arising when the expectations of stakeholders (such as customers, shareholders, employees and investors) are not met and their reaction can adversely affect existing or new business relationships with them. They are unique because they depend on external assessments and can originate from a wide variety of sources, including other risks and social, economic or sector conditions.
The reputational risk management model involves preventing such risks, identifying and controlling them proactively to reduce their probability of occurrence and mitigate their impact. The entity has various tools at its disposal for this:
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