Reputational risk is the risk that public exposure of unethical behavior, compliance failures, or operational errors undermines trust, damages brand equity, and leads to a loss of customers and enterprise value. Reputational risk is often a secondary threat triggered by a primary failure in another risk domain.

[Primary Systemic Break] 
           |
           v
[Data Leak or Compliance Failure] -------> Triggers public exposure vectors
           |
           v
[Loss of Trust & Brand Value] ---------> Drives immediate customer departures
           |
           v
[Long-Term Drop in Valuation] ----------> Secondary reputational damage realized

To manage reputational risk, companies must establish proactive communications playbooks and clear crisis escalation protocols. This includes monitoring brand sentiment across public channels, training senior leaders on crisis communication, and addressing underlying operational and compliance failures before they escalate into public crises.