The value of a good reputation in the eyes of customers, regulators and the community at large is difficult to overestimate. Yet, the last months have been full of reports of disasters.

In July, Barclays and others were headline news due to the Libor scandal. In August, according to the Guardian, Stephen Hester, chief executive of Royal Bank of Scotland "admitted that the reputation of the banking industry had plunged to a new low, as the bailed-out bank was hit by a string of charges caused by computer mistakes and mis-selling of financial products – with more to come from the Libor scandal." Standard Chartered was in the news for issues related to transactions with Iran.

Also in July, American Banker published the results of the 2012 survey of the reputation of 30 large banks (conducted in January and February, before the latest wave of headlines). A score of 60 on a 100-point scale was "a hallmark of a weak or vulnerable reputation." Yet, 8 of the 30 scored below this mark and everybody was below 70.

Some banks, such as Capital One, have responded to the need to manage reputation risk by establishing departments focused on managing their institution's reputation. But there are some general actions that should be given strong consideration by every financial institution, whether small or large, regional or global.

Monitor your reputation. It is very important to know how your customers feel about you, and one of the best ways to obtain that knowledge is by monitoring what they say in social media. There are quite a few tools available to monitor your online reputation, but it is essential to establish the level at which you will be satisfied, be prepared to respond should your reputation fall below that level (which may require short-term attention to the complaints of an individual or small group) and have long-term plans to maintain your reputation at or above the acceptable level.

Many banks have established other ways to communicate to customers, including Facebook pages. It is critical to have experienced employees monitor and make intelligent responses when customers post. Mistakes, including a failure to respond, can have a lasting effect and spread virally.

Social media is not only an excellent way for monitoring your reputation, but also for enhancing it. As was reported in another American Banker article, the "Reputation Institute, in a separate study this year of corporate reputations globally, found that social media was more powerful than both mainstream and online-only news media in creating a positive influence on reputation."

Carefully monitoring and responding when potential issues surface through more traditional channels, such as Customer Service phone lines or letters to the branch, remain critical – as is training individuals how to speak for the company, whether in social media, to the press, in other public situations or in letters to customers.

Make reputation risk a major part of your enterprise risk management program. While reputation risk merits a risk category and measurement of its own, the impact on reputation is typically the result of a failure (or the perception of a failure) to manage other risks.

For example, an allegation of failure to address compliance risks (such as discrimination in lending) that results in a newspaper headline will impact corporate reputation. A failure to adequately protect customers' private and confidential information will similarly affect reputation.

The technique for addressing this is to make an assessment of the potential impact on the bank's reputation a standard part of the assessment process for every single risk, whether operational, strategic, market, credit, IT-related or so on. The potential reputation effect should be included twice: as part of the assessment of each risk's level and in aggregate for reputation risk across the organization.

Communicate and educate. Because reputation risk is so vitally important, it should be included in every executive's key metrics. The board and top management will focus on the overall condition, while each business unit executive monitors his or her area.

Education should be continuous on what to do and not to do, and how to stay informed of new opportunities to improve the bank's reputation (or harm it). Rather than expect every individual to be up-to-date, one individual or team should be charged with keeping everybody informed and for ensuring that related guidance as well as monitoring is current.

It's difficult to put a value on a bank's reputation. It should be a major asset on the balance sheet as it helps the bank win the battle for customers' goodwill and business. Inappropriate actions or a failure to address reputation risks can have significant short-term and long-term effects.

Reputation risk is an area meriting continued attention from the board on down, with sufficient resources allocated for people, technology and processes. It is no longer safe to assume that normal business processes are sufficient.

Norman Marks, CPA, CRMA, is vice president at SAP, where he specializes in governance, risk management, internal audit, compliance, enterprise performance, and business intelligence. He is the author of the Institute of Internal Auditors' "Minimize Costs & Increase the Value of Your Sarbanes-Oxley 404 Program."