Reputational risks and large international banks

The paper considers the causes, costs and consequences of reputational risk in large international financial institutions. A conceptual strategic positioning model focusing on clients, products and geographic arenas is superimposed on a flow of funds model based on the key financial intermediation functions. This nexus is used to identify important areas of reputational risk, which are then documented in an inventory of adverse events in recent banking history, and explained in terms of behavior failures in compliance, public expectations and behavioral norms. This framework is then used to position empirical studies of reputational risk in the literature, and a normative discussion of reputational risk governance and bank culture.