Management Consulting
Aon
Full Credential Description
In the case study of two financial institutions during the LIBOR crisis, the contrasting approaches to reputation management led to significantly different outcomes. Financial Institution 1 acted decisively by admitting to manipulating the LIBOR, accepting responsibility, and cooperating with the Financial Services Authority (FSA) investigation. This institution quickly implemented compliance measures and internal controls, which included the resignation of its CEO shortly after the settlement. As a result of these proactive measures, Financial Institution 1 experienced an 8% increase in value, adding $3 billion in shareholder value over the year following the crisis. Conversely, Financial Institution 2's response was marked by a slow and ineffective approach. Management failed to identify and manage the risks associated with inappropriate submissions, leading to serious reputational damage. The division head resigned due to mismanagement, and the institution suffered a staggering 61% decrease in value, resulting in a loss of $13 billion in shareholder value over the same post-event year. This stark contrast highlights the critical importance of timely and transparent communication in managing reputation risks, particularly in the face of significant crises.