While they are taking more notice, corporate boards are unsure about what to do. For some reason, most companies and their leadership still believe that forging a strong reputation is relatively easy and merely requires using common sense. To them, it is simply a natural consequence of doing right by customers, employees and business partners.

To be sure, successful reputation risk management is difficult. Typically, it requires a high level of strategic sophistication and mental agility. This can run counter to day-to-day business decisions and corporate structures built for effectiveness and efficiency. A company's reputation is shaped not just by its direct business partners, customers and suppliers, but also by external constituencies. Frequently, constituencies dormant for quite awhile spring into action when a reputational crisis erupts. Companies need to have a process to identify such risks.

A company's reputation rests on what other publics are saying about the company besides its business partners and customers. Thus, company officials must be able to assume external publics' perspectives and viewpoints, especially when they're critical or hostile. A proper response by business leaders requires a strategic rather than defensive approach. Anger or self-pity isn't helpful.

A strategic approach requires the emotional strength to treat reputational difficulties as understandable -- even predictable -- challenges that should be expected in today's business environment. Companies and chief executives must handle reputational crises like any other major business challenge: based on principled leadership and supported by sophisticated processes and capabilities that integrate with the company's business strategy and culture. Their reputational trust depends on it.