Not long ago, creditors, bondholders, and other risk-averseinvestors considered so-called “sin industries” to be safe havensthat were less susceptible to market fluctuations. However, inrecent months, we've seen how rapidly society's perceptions of andtolerance for “sin” can change, whether they are problems with anentire industry's business model or with the behavior of a specificcompany's executives. We've also learned how much economic damagecan be caused by angry and disappointed stakeholders as a result ofsuch problems.

We live in an era of cultural climate change and reputationalrisk tornadoes. Finance professionals who can demonstrate thattheir companies understand how to mitigate these risks—and who canprovide validation of their reputational risk managementpractices—will find their reward in a lower cost of capital.