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Digital EditionTransportation Sector Ranks Environmental Issues and Cyber Threats as Top Reputational Risks
Environmental issues now represent the greatest reputational threat for passenger transportation companies, with 63% of senior executives surveyed identifying sustainability concerns as their top risk, while cyber threats jumped to 61% from just 28% a year earlier, according to WTW’s third annual Reputational Risk Readiness Survey.
The transportation sector faces a dramatically different risk environment than just a year ago. While safety incidents historically dominated reputational concerns for airlines, cruise operators and rail companies, environmental scrutiny and digital vulnerabilities have surged to the forefront, WTW’s survey showed.
The rapid rise of cyber threats reflects the industry’s growing dependence on digital infrastructure. Recent global IT outages that grounded flights worldwide demonstrated how technology failures can paralyze operations and damage brand perception, according to the report. Nearly half of organizations experiencing cyber attacks reported difficulties attracting new customers, while 43% lost existing clients.
Environmental pressures continue mounting as regulatory requirements expand across jurisdictions. European Union regulations demanding granular environmental impact reporting create new compliance challenges, while activists increasingly target airlines and cruise operators over sustainability and biodiversity concerns, the report said. Social issues also gained prominence, jumping to 53% of respondents citing these among top concerns from 41% a year earlier, potentially reflecting heightened scrutiny of labor practices and cultural positioning.
Disease outbreaks represent another growing concern, rising to 36% of respondents from 20%, as cruise lines experienced their worst year for stomach illness outbreaks in over a decade, the report said. Meanwhile, traditional safety worries declined significantly, dropping to 33% from 53%, suggesting long-term safety investments are producing results, particularly in the passenger rail sector, WTW said.
Companies Strengthen Governance While Crisis Readiness Improves
Transportation firms demonstrate growing sophistication in managing reputational risks through enhanced processes and oversight, according to WTW. The proportion of companies addressing reputational risks at most board meetings increased to 58% from 44%, while 86% now maintain formal risk assessment processes.
Crisis response capabilities show marked improvement, with 91% of companies maintaining dedicated teams that train together for adverse events, the report noted. The percentage linking crisis management to board-level performance indicators nearly doubled to 36% from 20%, indicating greater corporate involvement beyond traditional public affairs functions.
However, executive engagement with social media remains limited, averaging just four interactions annually, the report said. Only 64% of firms consider social media important for reputation management, down from 89% previously, suggesting companies increasingly avoid potentially polarizing digital platforms.
Financial Preparedness Lags Behind Operational Readiness
Despite strengthened governance and crisis management capabilities, transportation companies remain vulnerable to the financial consequences of reputational damage. Only 15% possess strong modeling capabilities to quantify first- and third-party costs from reputational events, though this represents improvement from 5% in 2023, according to the report.
This modeling gap creates significant vulnerabilities as reputational damage affects revenue, recruitment, and financing opportunities. Banks increasingly incorporate ESG credentials into lending decisions, making reputational standing a direct financial consideration, WTW noted. While 96% of companies maintain contingency budgets for reputational crises, without accurate impact models, these reserves may prove inadequate for sustained damage.
Obtain the full report here. &
