Final answer:
Reputation risk is more significant due to the widespread use of social media and the rapid spread of information which can affect consumer perceptions and trust. This elevation in reputation impacts has led businesses to emphasize online presence and proactive reputation management.
Step-by-step explanation:
Reputation risk has grown in importance because more people are using and accessing social media. Social media platforms have become integral in shaping consumer behavior and perceptions towards businesses. A strong or weak reputation can significantly impact a company's success or failure, particularly in an age were information spreads rapidly online.
With the increased use of social media, there is greater visibility for personal opinions, experiences, and reviews shared by customers. This means that any negative feedback can swiftly damage a company's reputation. Additionally, as more consumers turn to online sources for researching products and businesses before making purchases, a robust online presence and positive reputation are essential. The increased connectedness also results in higher stakes for privacy and data security, further elevating reputation risks.
Therefore, businesses must be vigilant in monitoring their online presence and managing their reputations proactively. Building a positive reputation leads to trust and loyalty from customers, who are then more likely to become repeat buyers and advocates for the business. Conversely, a damaged reputation can deter potential customers and lead to significant losses.