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Reputation Risk Management

Management of business reputation risk is necessary in order to reduce possible losses, preserve and maintain the business reputation of the credit institution before clients and counterparties, founders (participants), financial market participants, state and local self-government bodies, banking unions (associations), self-regulated organizations to which the credit institution is a participant. Various criteria provided by internal documents of the credit institution can be used to identify and assess factors of business reputation risk, to effectively assess the risk itself, as well as to study the degree of exposure of the credit institution to the said risk.

In internal documents of the credit institution it is recommended to define the basic principles of management of business reputation risk taking into account domestic and international banking practice, including:

  • goals and objectives of managing the risk of loss of business reputation taking into account the peculiarities of the credit institution 's activity, its specialization;
  • How to identify, assess and determine the acceptable level of reputation risk, monitor the risk of reputation loss;
  • Taking measures to maintain reputational risk at an acceptable level, including controlling and/or minimizing risk;
  • the procedure for submitting information to the Board of Directors (Supervisory Board), executive bodies, divisions and employees of the credit institution on issues of management of business reputation risk;
  • The distribution of powers and responsibilities between the Board of Directors (Supervisory Board), Executive Bodies, Divisions and Employees with regard to the implementation of the basic principles of reputation risk management;
  • Monitor the effectiveness of reputation risk management.

Responsibility for the development and implementation of principles for managing the risk of loss of business reputation is recommended to be assigned to the Board of Directors (Supervisory Board) and/or the sole executive body in accordance with the powers defined by the charter and internal documents of the credit institution.

In order to ensure effective management of the risk of loss of business reputation to the Board of Directors (Supervisory Board), the sole and collegiate executive body, the head of the branch of the credit institution is recommended to:

  • take timely measures to eliminate irregularities in the activities of the credit institution; Promote the principles of professional ethics, including those adopted by banking unions (associations) and self-regulatory organizations to which the credit institution is a party;
  • Manage reputational risk with a future assessment of the credit institution 's reputational risk;
  • When managing reputational risk, consider the interlinkages of different risks, their ability to complement, reinforce or compensate each other;
  • Establish the procedure for submitting internal reports on the response of the credit institution to the feedback of mass media, clients and counterparties, founders (participants) and other persons about the credit institution, affiliates, subsidiaries and dependent organizations;
  • Develop and implement training and retraining programmes for employees;
  • to observe the principle Know the Employee.
  • ensure that the real owners of the credit institution are identified.

It is recommended to provide for measures of protection of the credit institution, including those aimed at preventing actions of third parties to involve employees in illegal actions.


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