Risk, Professional Reputation In Age Of Disruption

Ryan McSharry 3 April 2024

Risk, Professional Reputation In Age Of Disruption

The author of this article contends that preparing for the unexpected, developing and, crucially, maintaining an up-to-date understanding of reputational risk is vital for advisors who often operate at the intersection of complex industries and sensitive client matters. 

The following article comes from Ryan McSharry, UK crisis head at Infinite Global, an international public relations firm. The author reflects on the demands of protecting reputations in volatile times, as exist today. This topic plugs into the “protecting the client” broad narrative that this news service writes about regularly. It also touches on matters relating to privacy which the editor of this news service spoke on at a recent conference.

This publication is pleased to share these comments; the usual editorial disclaimers apply. To respond, email

We are living in volatile times. 

While reputational risk management is not a new concept, recent years have seen advisory organisations grappling with even more challenges than usual, from ESG concerns and geopolitical risks to heightened regulatory scrutiny.

Preparing for the unexpected, developing and, crucially, maintaining an up-to-date understanding of reputational risk is vital for advisors who often operate at the intersection of complex industries and sensitive client matters. 

But while there are significant ramifications from getting it wrong – there are positive benefits from getting it right.

What’s your reputation worth?
The value of an advisory firm's reputation cannot be overstated. 

A strong reputation enhances client loyalty, attracts top talent, and opens doors to new business opportunities. Conversely, reputational damage will lead to loss of clients, increased legal and regulatory scrutiny, and erosion of trust in the marketplace. 

It is not uncommon for an advisory firm to lose one third of its brand value (typically valued at around 40 per cent of annual revenue) as a result of a reputational crisis, and that might be best-case scenario – sometimes, a crisis will be existential in nature, particularly where an ineffective response fails to mitigate, and only exacerbates, the impact. 

But it’s not just about the money and the business impact. Reputational crises at advisory firms often have very personal consequences, sometimes leading to the departure of senior figures and dramatically affecting the careers of those individuals involved. 

They also lead to indirect consequences, typically an increase in costs, distraction from the all important “business as usual,” as well as leading to unanticipated organisational and cultural change. 

The drivers of disruption
Disruption is driven by various factors, each exerting its own unique influence on the business environment. Technological advancements, shifts in client behaviour, and geopolitical and economic instability are just a few examples. But these are all exacerbated by two key factors – a general decline in trust of businesses, fuelled by an epidemic of mis- (and dis-) information, and the ever-increasing velocity of emergent and unpredictable risks.  

Critically, these disruptors can quickly reshape entire industries, forcing firms to adapt quickly or risk obsolescence. The changing “rules of the game” expose specific risks and vulnerabilities for professional advisors with crisis triggers falling into three primary areas: 

-- People – including partner and employee behaviour, and firm culture, gender pay-gap performance and lack of diversity, and staff investment, retention, and employee wellbeing;

-- Clients – including client types and toxic associations, lack of due diligence and conflicts of interests, and regulatory compliance; and  

-- The firm – safeguarding confidential information and cyber resilience, supply chain awareness and integrity, environmental performance, increasing expectations of transparency and expectations of social activism or, conversely, the lack thereof.   

Why are reputational crises for advisory firms difficult to address?
Responsibility for managing reputational risk often falls into a nebulous gap, with no clear ownership among risk management, communications, and other business units, for instance those handling stakeholder relationships, such as fee earners. 

This lack of defined responsibility contributes to poor situational awareness, as there is a weak understanding of the sources of reputational risk and how to effectively manage them. Furthermore, there is a tendency for firms to miss the broader external stakeholder perspective, resulting in a failure to address key concerns and expectations.

Compounding this is a low awareness of the full cost of crises. Many firms fail to grasp the extensive impact of reputational damage discussed previously. Despite these potential consequences, there is often a pervasive fear of rocking the boat – a cultural resistance to the behavioural changes necessary to effectively manage risk.

Moreover, no one likes to talk about failure. Firms are reluctant to openly discuss failure and learn from past mistakes – particularly where personal accountability has to be accepted. Without a structured review process or understanding of previous crises, organisations are unable to identify patterns, assess weaknesses, or implement corrective measures. 

This aversion to introspection prevents organisations from addressing underlying issues, asking difficult questions, and ultimately inhibiting the ability to learn and adapt. Breaking this cycle requires a cultural shift towards openness and accountability, and a willingness to confront challenges head-on.

Enhancing resilience 
Firms should take an active approach to crisis management, assessing where they are likely to be exposed, looking at the worst-case scenarios and undertaking readiness preparation. By following a structured approach, firms can enhance their readiness to address unforeseen challenges, such as media training, re-thinking messaging or even fundamentally re-assessing policies and procedures.

Scenario mapping and risk mitigation plans should be updated regularly, as types of events that could trigger a crisis, cultural expectations, and behaviour evolve. 

Understanding the crisis lifecycle – from pre-crisis preparation to post-crisis recovery – is critical. By fully anticipating the potential challenges ahead and having a well-defined and strategic response plan in place for each, firms can minimise crisis impact and expedite the path to recovery.

The team tasked with preparing for and managing a crisis must also function effectively. A diverse range of people with different perspectives may need to be involved, including external PR advisors who can hold up a mirror to the business. The correct person needs to be chosen to lead – which may involve difficult conversations. Not all managing partners or subject matter experts will be the right person. 

Bad firms are destroyed by a crisis, good firms survive them, and great firms learn from them
Navigating risk and upholding professional reputation in a disruptive landscape requires a proactive and strategic approach. By understanding the drivers of disruption, adapting to the new risk landscape, and investing in effective crisis response capabilities, advisory firms will safeguard their reputations and thrive in an ever-changing world.

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