Axis Insights- How "Worthy" Is "Worth It"?

A reputational risk refers to the threat in terms of profitability or sustainability of a financial institution that is triggered by the public's unfavourable perception of the organization. For instance, if a financial institution has a high-net-worth customer who is a pedophile, the public could cast doubt on the positive image, integrity and goodwill of the financial institution. Another example could be if a financial institution were to engage in activities that could harm the environment, this could change the perception of its clients as well as its employees. In this line, Volkswagen had to spend up to USD 14.7 Billion to settle allegations of cheating emission tests and deceiving customers on 2.0 litres Diesel vehicles with respect to the US Federal Trade Commission. Consequently, this cheating scandal took a significant toll on the reputation of Volkswagen, causing a major drop in its sales as well as causing employees to lose trust over the group.