How Do Internal Audits Help to Manage Reputation Risk?

How Do Internal Audits Help to Manage Reputation Risk?
February 5, 2014 seouser
project management

If you thought that internal audits were only important in a large corporate organisation, think again. A huge part of keeping abreast of the competition lies in managing reputation risk effectively – especially in industries that require a solid reputation in order to maintain sales. Audits are an important tool across various departments, from HR to marketing, sales and management. Unlike external audits that focus on outside factors, the internal auditing process is focused on the people, processes and procedures conducted within the organisation. By identifying potential risks early on, it is possible to prevent bigger issues from slipping through the cracks and causing major problems when unleashed. It is this benefit that helps you keep your reputation stakes within reason, with the help of a smart internal audit system.

Reducing Reputation Risk with Internal Audits

There is little doubt that corporate mistakes, oversights, non-conformance and other such risks can wreak havoc on a company’s reputation. One misstep by an employee can result in a public relations nightmare – customers may even take their business elsewhere if your reputation suffers. Aside from lost business and a decrease in new business, employee morale can also take a knock, leading to even further issues. Internal audits help to prevent these risks from becoming a reality. Some of the ways that audits can help to keep risks down include the following:

  • Identifying employees or managers within the company who are equipped to monitor and report potential problem areas in their departments or teams;
  • Assist senior management or dedicated risk management committees in evaluating overall risk assessment across the organisation;
  • Providing a clear overview of organisational risk through trends that can be tracked and reported;
  • Spotting employee training gaps, knowledge gaps or behaviour gaps that may lead to service, quality or operational risks;
  • Improving reputation strategies through noticing and eliminating risks well in advance.

Reputational risks are not always as cut and dried as they appear. Many risks occur as a result of external circumstance, such as a poor economic climate, environmental issues or events outside of the company’s control. As such, risks can also decrease much as they increase. Regular internal audits help to ensure that you stay on top of the constantly evolving risks, and work towards maintaining a healthy reputation, whatever the climate.