" ....Olson said examiners are looking at credit risk, market risk, liquidity risk, operational risk, legal risk and reputation risk...."Source ArticleIsn't "reputational risk" a component of credit risk? Bad reputation eventually results in increased cost of borrowing? Why the need for further classification?

While it's true that reputation influences credit, it also influences profitability, efficiency and even survival. It's possible to imagine events that would increase a company's credit rating but decrease its reputation, such as the discovery that it has been hiding assets and underemploying them.I think reputational risk is something foisted on regulators for political reasons. You want to say that companies should do good thinks like treat employees well, make useful products, pay lots of taxes, solve social problems, give to charity, do whatever any pressure group wants them to, make big campaign contributions and so on. Many profitable companies don't do some or all of these things. So you say they are incurring "reputational risk" and ask regulators to beat them up until they act better.I think reputation is something positive that companies must work to build. It is extremely valuable, but it cannot be legislated. It also cannot be sought, people who care only for their reputation have bad reputations. Good business often requires going against consensus and challenging things, that's terrible for reputation ("Worldly wisdom teaches that it is better for the reputation to fail conventionally than to succeed unconventionally," John Maynard Keynes).Therefore, I think it's important for regulators to encourage companies to act legally and ethically, but not to manage their reputations. Companies should consider their reputations, but as a positive asset to build, not a risk to avoid.

You want to say that companies should do good thinks like treat employees well, make useful products, pay lots of taxes, solve social problems, give to charity, do whatever any pressure group wants them to, make big campaign contributions and so on. Many profitable companies don't do some or all of these things. So you say they are incurring "reputational risk" and ask regulators to beat them up until they act better >>My favorite comment pressure groups comes from Cypress Semicon CEO T.J. Rodgers

I ran into the term "reputational risk" recently in a slightly different context. Talking with a state pension fund manager, he said "If I invest in a hedge fund and it makes money I don't get any points, but if I lose money my reputation takes a hit." It's sort of like the old investment management adage to the effect that it's better to lose money owning Ford than make money owing some off-the-wall investment. Was that Keynes? Sounds like him.