The Cost of Legionella on a Company's Reputation
For most of our clients, reputation damage is the biggest financial risk that is associated with an occurrence of Legionella (though there are also many others too).
What is Reputation Risk
"Reputational risk, often called reputation risk, is a risk of loss resulting from damages to a firm's reputation, in lost revenue; increased operating, capital or regulatory costs; or destruction of shareholder value, consequent to an adverse or potentially criminal event even if the company is not found guilty".
A company’s reputation is probably its most valuable asset. The loss of its reputation is a risk that is hard to put a quantitative number to or to voice in a business case. There is a great paper on this subject - The Impact of Reputation on market Value – by Simon Cole – this details the reputational risk issues and also how much some companies reputation affects the market capitalisation of the business.
The problem is that is hard to value your current reputation and therefore account for what a bad reputation would do to the business – there are a few surveys out there that estimate that around 75% of a companies value is from intangibles whilst other surveys estimate that brand and reputation account for 40% of a companies value.
For some types of companies such as food and beverage companies this value may well be in excess of 75% of the company's market value.
Examples of reputational risk can be found by looking at the recent problems that one of the world’s leading mobile telephone companies has encountered along with one of Germany’s leading car manufacturers (we won't name anyone).
So whilst we can’t tell you an exact value for reputational risk we would urge clients to consider whether a Legionella issue at your site could affect -
- Investors / shareholders investing in the business.
- Lenders still lending or withdrawing credit lines and the consequential affect on the cost of capital.
- The loss of key employees.
- The loss of clients.
- Make it harder to win new business/clients.
If you answer yes to any of the above, you should probably ask yourself....
Can you or your business afford to take this risk?
We provide an effective solution to managing the risk of Legionella. We are not Legionella Risk Assessors/Auditors. What we do is we treat water (both hot and cold) to control legionella by eradicating bacteria, viruses, fungi and biofilm. In many instances we work on sites that have elevated Legionella counts. Despite our clients following all the recognised protocols they may still experience elevated Legionella counts. this is where we have stepped in and provided a solution that has rectified this problem.