Elon Musk does not need a press conference to shake the world. He just needs to hit “post.”
Tesla’s stock went on a rollercoaster ride in 2025. Suddenly, every supplier, partner, and shareholder had to hold on tight.
That is a reputational risk in real time. And here is the thing: you do not need to be a tech billionaire to feel it.
Why Reputational Risk is Escalating
Reputational risk is the potential damage to a company’s name and credibility caused by its own actions, its employees, or even third-party partners. In today’s complex supply chains, one slip-up from a supplier can trigger a serious fallout that impacts the entire business.
In times of social media, bad press travels faster than ever before and hits even harder. And while 70-80% of market value often comes from intangible assets like brand equity, isn’t this exactly why the risk is so high? One bad headline can undo years of effort. The market value is so intangible, it can shift drastically.
Common Supply Chain Reputational Risks
Reputational risks are unfortunate but pretty common events that companies can face. Some common types include:
- Poor product or service: If a product fails to provide good value to its customer, it can lead to recalls, safety issues, and customer backlash. All of this can harm a brand’s reputation quickly and severely.
- Employee and Leadership Behavior: Actions or statements from employees or company leaders can reflect poorly on the entire organization. This includes behavior, false claims, or controversial public statements that cause outrage or mistrust to the consumers.
- Compliance failures: Not following regulations, whether it is environmental laws, labor standards, or ethical sourcing rules, can lead to scandals, fines, and huge losses to businesses. And even if the company itself does not produce the good itself, even a backlash on the supplier can cause major damage.
The Cost of Reputational Risk
As mentioned before, good brand equity can boost a company in many ways. And the more . However, once the reputation is damaged, the costs are huge. Some companies have lost millions, even billions, just because of one bad story or a poorly handled scandal.
As for example, in 2013, Tesco faced a major scandal when its beef burgers were found to contain up to 29% horse meat. The backlash was huge, and the company lost over £300 million in value. It remains one of the most talked-about scandals to this day and has spread beyond Tesco to other supermarkets worldwide.
Enron Scandal
An example of a reputational disaster is the Enron scandal in the early 2000s. Enron, once a giant in the energy sector, fell apart after it was revealed that the company had been committing fraud by hiding massive debts and inflating profits. This led to one of the biggest corporate bankruptcies in history, costing investors billions of dollars and destroying the company’s image. The Enron collapse showed that a company’s working culture and its transparency are key to protecting its reputation. Despite its success, Enron failed to manage these risks. The result was a public collapse that is still studied till this day and even has its own movie.
Elon Musk and Tesla
Another more recent example is the Elon Musk and Tesla controversy. Elon Musk is known for his controversial online presence, especially on the platform X, formerly known as Twitter. His tweets brought not once but multiple times, scandals over his persona and also the company Tesla. However not only did his post bring outrage to the crowd, but also his presence in real life.
Most recently, he made headlines at a Trump rally for making hand gestures that some people found inappropriate, which led to speculations about his political leanings. But people also criticized him for supporting Trump in general, even though Tesla has been seen being a more left leaning company, for supporting the usage of green energy.
Following that, people started protesting and vandalism against Tesla cars. News outlets showed how Tesla cars with bullet holes or even burned. Additionally, Tesla’s stock value experienced a decline. But despite the growing outrage and public concerns, Musk did respond but with little to no understanding of why people were upset, and still does not see a problem with his actions.
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Figure 1: Tesla cars under vandalism, Soucre: Youtube
How Companies Can Safeguard Reputation
To avoid such disruptive risks, companies should:
- Have Risk Awareness: Understand where reputational risks can emerge, internally and across the supply chain
- Invest in Public Relations: A good crisis plan, and active media management can help companies respond faster and effectively to mitigate further damage that bad press can cause.
- Understand Brand and Consumer: Understand how customers, investors, and the public view your brand, and monitor how that perception changes over time.
- Train Employees and Leaders: Everyone should know the company’s values, communication guidelines, and crisis response plan.
Conclusion
Reputational risk does not give warnings. It happens unexpectedly and hits where it hurts the most. That is why companies need to stay alert, stay prepared, and remember that one scandal can undo everything.
