Ways to maintain sustainable system of managing reputational risks within suppliers relations

Reputational risk is the main threat to one’s ability to maintain sustainable development because it influences company’s long-standing position. However, very little empirical research has been carried out to determine how to manage reputational risk using sustainability reporting. This paper addresses the problem of reputational risk within supplier relations system. The paper proposes an approach based on identification of key suppliers to understand their needs and expectations and development of specific recommendations on disclosure. In the paper we propose a methodology of assessing reputational risk in supplier relations system. For this purpose it was proposed to divide suppliers depending on geographical criteria and duration of cooperation with the client company. Also an approach was proposed to select expectation criteria and indicators. It must be underlined that by reputational risk we understand the probability that reputation will suffer, and direct economic loss will follow. That loss can be regarded as reputational loss. Having assessedprobable reputational loss it seems reasonable to propose indicators to disclose. Such indicators are proposed for both the internal accounting system (to manage reputational risk) and for disclosure to third parties. Results of the assessment showed significance of suppliers relationship system control and represented indicators to disclose.