Reputation risk is real. Indeed, reputation can collapse in a relative instant. Think Rupert Murdoch this week. Indeed, his News Corp entity has now been sued by shareholders due to the hacking fiasco.
Also think more broadly about the many politicians who struggle with the reality that image does in fact matter. For example, there was John Edwards with his $400 haircuts – not exactly the stuff of the common man. Now, erstwhile budget cutter Paul Ryan has his image waterloo with two $ 350 bottles of wine. See this and this story about an observant business professor discovering Ryan at dinner and noting that he and his friends were drinking $ 350 bottles of wine with fellow fiscal conservatives (very wealthy ones). Now Mr. Ryan is embarrassed because of the disconnect between perception of his actions, and his website’s effort to foster a reputation as a humble, financially disciplined money manager:
He is the Chairman of the House Budget Committee, where he works to bring fiscal discipline and accountability to the federal government. He is a senior member of the House Ways and Means Committee, which has jurisdiction over tax policy, Social Security, health care and trade laws. (emphasis added).