Reputation Risk in the Supply Chain
Recently, Oxford Metrica, an analytics and advisory firm which has been “studying the relationship between reputation and value for nearly two decades”, has issued its Reputation Review 2012, which was sponsored by Aon Corporation. Herein, the major reputation events in 2011 are reviewed and the lessons learned are extracted. Most importantly for us, the report contains some interesting examples of reputation risk in the supply chain. Particularly, the authors examine the 2011 earthquake in Japan and “pursue the earthquake theme through the knock-on reputation effects as the disruption of the earthquake reverberated through the global supply chain in Japan, Korea and further afield”. The report highlights that loss of a key customer or disruption at a key supplier can cause reputation challenges at one’s own firm. I believe that reputation risk inherent in the supply chain, as discussed in the report, is an often overlooked aspect of supply chain risk management.