What is Reputational Risk

Reputational risk is integrated into every aspect of banking and is therefore highly correlated to other
types of risk. The interconnection between reputational risk and the universe of other risks has become
complex due to globalization in banking and evolving technological changes. In order to understand
reputational risk and the related boundary issues, we need to first understand what reputational risk is.
Reputational risk is defined as the risk arising from negative perception on the part of customers,
counterparties, shareholders, investors, debt-holders, market analysts, other relevant parties or
regulators that can adversely affect a banks ability to maintain existing, or establish new business
relationships, and continued access to sources of funding.
It is clear that other types of risks like credit, market, legal, compliance, technology risk are closely
interconnected, and if not understood and managed holistically, could cause reputational risk. However,
it is also possible that reputational risk could cause other risk such as business risk and liquidity risk. If
one or more stakeholders perceive a banks reputation to be of concern, then that could potentially lead
to a reduction in business, a run on deposits, decrease in credit as well as customers choosing not to
do business with the bank. This in turn could result in significant strategic, business and liquidity risk for
the bank.
Whether failure to manage other risks results in reputational risks or failure to manage reputational risk
manifests in other risks such as credit and liquidity, it is imperative that understanding and managing
reputational risk in a proactive manner is extremely important.
Event which results in reputational risk may occur with some unexpected consequences. Effective and
expedient identification and management of risks at source can help to identify major threats to the
Groups reputation and ensure the risk is reduced to an acceptable level given the presence of
information highways such as internet and various mediums. Building a rapid-response crisis
management capability for unexpected events can improve the Groups resiliency and preparedness,
and minimise damage to the Banks reputation when threatening events occur.
UOB has established a sound internal escalation process with various Task Forces and Crisis
Management Team to manage reputational risk events of different level of severity. This is to facilitate
appropriate decision making. Communication with key stakeholders, such as customers, employees,
media, vendors, regulators and government agencies is a key component of crisis management.
In the event of a crisis, Group Chief Risk Officer, Group Chief Financial Officer and BCM Recovery
Director will be notified. Collectively, they will assess if the Crisis Management Team should be
activated to manage the situation. Group Compliance will notify the regulators of any crisis in
accordance to regulatory requirements.
Communication with various internal and external key stakeholders will be handed by following
functions:
Group Human Resources and Group Strategic Communications Employees
Group Strategic Communications Media
Customer Touch-Points Customers/Counterparties
Relevant Business / Support Units Business Partners
Group Investor Relations Investment Community
All messages for communications with internal and external key stakeholders must be reviewed and
approved by Group Strategic Communications and Customer Advocacy (GSCCA), relevant Functions
Heads, Group Legal, Human Resources and Compliance.

The governance process for managing Reputational risks in the Group is a 3-stage approach:
1. Risk Analysis & Reporting

2. Early Warning & Escalation

3. Crisis Management

Risk Analysis and Reporting

Effective assessment and management of risks can identify major threats to the Groups reputation and
ensure they can be reduced to an acceptable level. It is important to systemically identify, assess, report,
manage and monitor such risks as part of the Groups reputational risk management governance
process.

Early Warning and Escalation

Reputation crises can be avoided / mitigated if warning signs are identified at an early stage and a
robust internal escalation process is in place to facilitate appropriate decision making. The Group has
established a set of warning indicators and escalation processes for various types of risk areas.

Crisis Management
Building a rapid-response crisis management capability for unexpected events can improve the Groups
resiliency and preparedness, and minimise damage to reputation when threatening events occur.
Assessment Questions
1. In the event of a crisis, which one of the following functions is the authorized party to communicate
with regulators?
A. Group Audit
B. Group Operational Risk Management
C. Group Compliance
D. Group Strategic Communications

2. In the event of a crisis, which one of the following functions is the authorized party to communicate
with the media?
A. Group Audit
B. Group Operational Risk Management
C. Group Compliance
D. Group Strategic Communications

3. In order to ensure consistent messages are disseminated across various target stakeholders
during a crisis, which one of the following functions must review these messages before issuance?
A. Group Human Resources
B. Group Strategic Communications
C. Group Compliance
D. Group Legal

4. Which of the following policies, procedures or guidelines are relevant to the governance of
communication with external stakeholders?
A. Guidelines on Communications with the Monetary Authority of Singapore and Singapore
Exchange
B. Group Social Media Policy
C. Group Policy on Media Communications
D. All of the Above.