Reputational risk management of a financial institution
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Дата
2020
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Анотація
Relevance of research. Confidence in different financial institutions, especially
banks, their shareholders and executives as well as in information they provided in
public, has declined significantly after the global financial crisis. The attention of
international financial institutions, supervisors and banks to the reputation risk has
increased in way to restore it. In particular, the EBA (The European Banking
Authority) document on SREP (Supervision and Evaluation Process; EBA / GL /
2014/13) emphasizes the need to consider reputation risk as an essential part of bank
risk management.
History has shown many examples of banks' reputational risk associated with a
wide range of potential sources that can have serious business consequences. Taking
measures to eliminate the consequences of losing your reputation requires enormous
effort and resources. Usually, the cost of a damaged reputation is significantly higher
than its maintenance, and therefore banks should avoid risk events that will lead to
their unfavorable perception by stakeholders. In order to avoid spending a significant
amount of money on reputation restoration, banks should take care to establish an
effective system for managing this risk.
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