A WTW survey of 500 executives from countries including Australia found “considerable lack of confidence” in respondents' own organisations’ reputational risk readiness.

While 83% of executives say they take the risk seriously, 77% are not fully confident in their own company’s approach to reputation and environmental, social and governance (ESG) risk.

The survey, released today, found that about 75% of companies do not hold their board members accountable for reputational and ESG risks – creating negative perceptions among staff of a lack of commitment.

Some 86% of respondents have reserved budget to cover a reputational event but 87% do not forecast the frequency and severity of potential damages, so the budget could be “misallocated”.

“In an increasingly digital, service-oriented economy, reputational risk is firmly on the corporate agenda,” WTW Head of Australasia Simon Weaver said.

“However, our findings also suggest that organisations may have failed to accurately assess the length and severity of a potential crisis – or the scale of the financial impact.”

Most organisations appear to view reputational crisis as a short-lived media event, he says, and not many have modelling to quantify the scale of financial losses.

“This means they may not be prepared for the full impact on their business if a damaging reputational event occurred which is why it is critical to look at reputational crisis insurance to mitigate potential reputational risk.

“It takes decades to build corporate reputation but takes minutes to ruin it.”