Introduction

The risks that threaten the reputations of corporates develop and change every year. The evolving landscape is largely driven by the emergence of new technologies, shifting public expectations, and the implications of external political, geopolitical and regulatory advancements. The last year was no exception, and while some established risks became more pronounced, with matured perspectives and implications, new considerations also surfaced.

Importantly, as every year brings new trends, the ability of companies to anticipate, respond to and navigate these changes will have notable consequences for their reputations.

Impact of a new government

After 14 years of the Conservative Party in power, 2024 saw the election of a Labour Government. It represented a moment of reset and reflection for companies as they considered the focus, strengths and challenges pertaining to the new administration.

Among these considerations, companies can expect Labour to have an increased focus on conduct, treating workers fairly and acting in the consumer interest. As a result, MPs may become more vocal about cases related to businesses, and draw attention to issues within the corporate world to solidify the Government’s stance to the general public. Companies should therefore be prepared for increased political engagement, particularly with the return of Select Committees, and plan their communications approach accordingly.

In addition, at a time when AI shifts from theory to implementation, with cyber security being an ever-increasing threat, there is a question mark around the new Government’s strategy and strength in the area. With the onus predominantly placed on companies to secure their operations, and a lack of uniformity apparent in the market, it offers both an opportunity and a risk for companies leading the charge and shaping the narrative, as regulators and the CMA become more involved.

This ties into the Prime Minister’s desire that, more generally, regulators take a more directional approach. Companies can therefore expect regulators to come under more pronounced political pressure to pursue certain political objectives – such as economic growth, and carbon emissions targets – within their regulatory activities. Companies should also brace for the fact that the CMA recently has been given much more substantial enforcement powers in respect of breaches of consumer law under the Digital Markets Competition and Consumers Act 2024, powers which were previously much more in the hands of otherwise preoccupied and cash-strapped local authorities.

Given the expected changing regulations within listed markets, companies will also be considering the benefits of being publicly listed versus privately held under the new Government. This is against the backdrop of evolving requirements for listed businesses, as non-financial reporting provisions acquire greater significance, together with an extended definition of ‘public interest entities’ takes hold, which will in turn increase reporting requirements for some privately held companies. How businesses communicate, and the structures they are required to communicate within depending on their ownership status, has a large bearing on investor, customer and employee sentiment.

Inescapable Growth of AI

AI has been a hot topic in boardrooms and on event panels for some time, but 2024 saw a sharp uptick in its widespread use, bringing into focus some of the more complex challenges it presents.

As businesses explore the use of AI within their own organisations, the potential risks must remain front of mind. This includes introducing potential biases in operations, increased cyber security risks, loss of quality and liability for error, lack of transparency around how decisions are reached – or unchecked decision making – and privacy concerns. A lack of understanding around its impact leaves companies exposed to reputational harm, as well as potential legal backlash.

In many ways, businesses are in a period of exploration, testing what works for them, their operations and their employees, while the landscape is simultaneously in a time of high scrutiny and rapidly advancing regulation. There is an urgent need for companies to understand AI, its limitations, and its unwanted side effects to effectively plan and communicate to keep stakeholders on side.

While internal roll-out posed its own challenges to businesses during the year, the risk of AI to company reputation from external bad actors continued to increase. For deep fakes to truly impact public sentiment two things needed to be present: the proliferation of social media and its use as a news source, coupled with advanced technology able to impersonate individuals and companies.

While businesses and regulators scramble to verify content and halt harmful fake news, without proactive strategies and clear protocols of how to identify and manage deep fakes and misinformation, companies are at increased risk of experiencing harmful consequences.

Culture wars, misconduct and safeguarding issues

Companies experienced challenges throughout the year as they navigated issues of gender, political affinities and beliefs, and race, which was further complicated by polarised debates against the geopolitical backdrop. In the current febrile environment, it is easy for businesses to be caught up in a sprawling narrative, with their issues being used as ammunition within culture wars.

In instances of misconduct, there is continued media and public interest in safeguarding and behaviour issues, resulting in businesses facing complex communications challenges. Maintaining anonymity of those involved and avoiding prejudicing any legal process, while speaking to the progress of the proceedings and company values can be a difficult line to tread. Getting stakeholders to understand the importance of anonymity and the risks of unwittingly breaching someone’s rights creates an additional layer of complexity in an area where trust is paramount.

To combat frenetic conversations in an emotive environment, companies must have strong processes, policies and messaging in place, to build their resilience and effectively manage issues as they arise.

Greenwashing

There has been consistent pressure on companies from investors, consumers and media to do more in relation to climate change, and as a result a swathe of ‘green language’, targets and reporting requirements quickly became part of corporate vernacular.

More recently, and particularly in 2024, focus shifted from the demands made of companies, to the unearthing of businesses that were not doing as they claimed. The implications for businesses that failed to qualify and substantiate their ESG credentials, and the impact on consumers that had been misled as a result, led to collective actions, financial penalties and a faltering of consumer trust.

With the increase in regulations regarding false advertising and misleading claims, heightened scrutiny by investors, watchdogs and the media, companies must be ever more cognisant of the evidence that substantiates their ESG strategies, and how they communicate them to their stakeholders, to avoid ongoing reputational issues.

Geopolitical risk

The underlying current of geopolitical discourse continued to impact decision making for companies throughout the year, both operationally and reputationally, as they navigated charged environments and divided viewpoints.

It has brought into clearer focus the importance of supply chain due diligence, and the ease with which seemingly inconsequential information can be misinterpreted and weaponised against businesses to draw conclusions. It has prompted companies to genuinely interrogate their understanding of what information is available to them, and what it could mean for their reputation through the lens of other perspectives. These Know Your Customer (KYC) challenges are particularly pronounced for High-Net-Worth Individuals (HNWI) and those that have done business in more difficult to navigate regions, whether currently or historically.

Conclusion

As we move into 2025, companies that take the time to look ahead, and plan for the risks that they are most exposed to, will be best placed to ride the tide of change and effectively manage their reputations against whichever backdrop emerges. Outside of planning for appreciated risks, companies that will fair best are those that have a best-in-class crisis response, and are prepared to expect the unexpected.