Reputational risk , often called reputation risk , is the potential loss to financial capital , social capital and/or market share resulting from damages to a firm 's reputation . This is often measured in lost revenue , increased operating , capital or regulatory costs , or destruction of shareholder value . Reputational risk is consequential of an adverse or potentially criminal event even if the company is not found guilty . Adverse events typically associated with reputation risk include ethics violations , safety issues , security issues , a lack of sustainability , poor quality , and lack of or unethical innovation . Corporate trust and relations often have an impact on the degree of reputational risk a business will experience . This type of risk is often informational in nature , and may be difficult to realize financially . However , extreme cases may lead to bankruptcy ( as in the case of Arthur Andersen ) . The reputational risk may not always be the company 's fault , as per the case of the Chicago Tylenol murders after seven people died in 1982 . From an accounting point of view , reputation it is kind of intangible assets ; reputational risk turns the concept of materiality upside down . Traditionally but not exclusively thought of in terms of financial magnitude , reputation means that even seemingly small events or losses , such as a minor regulatory fine , can have larger repercussions . The impact of reputational damage can be minor at first , however issues that are amplified by external social processes ( including the media and legal systems ) can lead to severe impacts on the firm 's position . Reputational risk was apparent in 2016 when Wells Fargo was exposed for opening millions of unauthorized bank accounts . This was done by the firm 's retail bankers , who were encouraged or coerced by some supervisors
Chicago Tylenol murders
Chicago Tylenol murders
Reputational risk