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Jul

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From the Desk of the CEO- July 2017

Every month, I am reflecting on the risks and the way people address it, especially the ones which we see daily on the news. And every month, I have so much to write about that I need to sift through the most important ones.

This month, I could draw a blanket over the risks as all of it reported, had one thing in common: Reputational Risk.

What is reputational risk? It is defined as:

  • Reputational risk, often called reputation risk, is a risk of loss resulting from damages to a firm’s reputation, in lost revenue; increased operating, capital or regulatory costs; or destruction of shareholder value, consequent to an adverse or potentially criminal event even if the company is not found guilty.

I want to ask you to cast your memory back to the first public and visible breach of our National Key Points (Waterkloof), when a family arrived there for an elaborate wedding at Sun City. Then the Nkandla Scandal and everyone who was even partially involved, were named and their reputation is in jeopardy and their career path is affected. Then we were looking at the attacks, which I wrote about in May 2017, regarding the National Police Commissioner. And in this month, he was awarded a R350 million award for damages against the POPCRU union.

If this is not enough, we are sitting with the Hawks Head who is taking Government to court, Brian Molefe, the same.

But what was for the cherry on the cake was KPMG and their involvement in the auditing of the channelled money for the elaborate wedding at Sun City, R30 Million mistake. How could anyone miss that?

And I cannot leave this one out, what about Bell Pottinger? They are the spin doctors of note and here their risk appetite has brought them in disrepute.

I wonder, if we could calculate, what is the financial damages for the Family which this is all about, we can see directly the financial damages on Brian Molefe and the judgement of R350 million towards the Acting National Police Commissioner. Can you imagine the Reputational Damages for Bell Pottinger?

BREAKING NEWS! As I am writing this newsletter, PwC: Big scam in the making? Ex-CFO accuses PwC of cooking books, evading tax and flouting laws. Compromising position to be in globally, effecting the Brand Reputation immensely.

Thus, a brand is built over decades, but it takes one irrational and not well thought through decision to damage the brand.

This all boils down to Good Corporate Governance.

Make

  • wise decisions,
  • think about the decisions you make and
  • if you made that decision, don’t try and spin yourself out of it.
  • This is a further insult to the already fragile state you are in.