What the ultimate cost to News Ltd will be, no one is sure, but there is one certainty, corporate governance and risk management will surely be elevated in priority.
The focus of many commentators is on this being a severe example of "Reputation Risk". Whilst reputation damage is a major aspect of these events, further investigation using cause, event, effect analysis provides a greater and more valuable insight into the case.
Using causes, events and effects to create a risk statement "The Risk of ...(Risk Event/s)... due to ...(Risk Cause/s )... resulting in ...(Risk Impact/s)..." we have:
The risk of:
- phone hacking and
- bribery of officials by employees...
- unethical staff or consultants and
- a "story at any cost" corporate culture...
- Financial loss - loss of shareholder value, earnings from News of the World, decreased advertising revenue, legal fees associated with governance restructure, defence of lawsuits.
- Global adverse media coverage.
- Non compliance with privacy laws.
The Webster dictionary defines reputation as "Overall quality or character as seen or judged by people in general".
The use of the word "overall" suggests that one's reputation is comprised of multiple building blocks - customer service, corporate governance and ethical behaviour as examples. Often, however, we see "Reputation risk" being considered as a risk event when upon closer inspection, it is the end result of more specific risk events that can have a number of impacts.
So if you see reputation damage being assessed as a risk event, stop and ask yourself, what actual events would lead to our reputation being damaged and what would be the more specific impacts that can be associated with them.
In all likelihood, these will be the true risk events and impacts that should be assessed.