CFOs value reputation over short-term profits

As corporate activities face growing scrutiny, organisations are becoming increasingly prepared to forego short-term profits if this would protect their reputations in the long term, a CGMA survey has found.

According to the global poll, conducted by CIMA and the AICPA, 76 per cent of CFOs and other senior finance professionals believe that their organisations are prepared to make such a sacrifice.

The respondents cited three main reasons for this increasing preoccupation with reputational risk:

  • Growing market demand for greater transparency.
  • Incidents at leading organisations or competitors leading to a loss of reputation.
  • The rise of social media.

Of the CGMA designation holders surveyed, 65 per cent said that their organisations “often or always” considered the financial implications of reputational risks when making investment decisions.

Almost half (44 per cent) said that their organisations had rejected a project that made financial sense because its reputational risks were too great.

“Organisations are increasingly recognising the need to take reputational risks very seriously if potential crises are not to turn into catastrophes. After all, nearly a quarter of the businesses surveyed admitted to experiencing a reputational failure – and the widespread use of the internet and social media casts a harsher spotlight than before,” said Tanya Barman, head of ethics at CIMA.

“But what is very worrying is the revelation that businesses still seem to be struggling to manage their non-financial reporting in this area.”

For more details, visit www.tinyurl.com/p5jolrf

Photo: Getty Images

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