**4.2 Proyecto de Reputación Corporativa (PRC)**

The PRC has two objectives: 1) to identify the risks that could affect the reputation of the company in its daily relationship with its stakeholders; 2) to identify the common management lines that should be implemented in all business lines and in all countries to strengthen the reputation of the *Telefónica* Group and minimize the potential impact of risks deriving from non-pursuit of the latter. A transversal process was launched to achieve this goal with the group's contribution from all the areas and management. A centralized approach was not considered effective since the reputation of the company is established through the daily activity of all the units. This first objective of identifying the dangers was achieved at the end of 2003, thus obtaining the basic information required to proceed with the PRC [54]. **Figure 3** shows the risk identification process in its five phases, as well as the agents involved in each process and the results achieved.

<sup>4</sup> *Telefónica* I + D is the innovation company of the *Telefónica* Group. Over the past few years, *Telefónica* I + D has grown within the global market to become a network of centers of technological excellence that extends far beyond the Spanish borders, starting its R&D activity up in its offices located in Barcelona, Granada, Huesca, Madrid, Valladolid, São Paulo, and Mexico. In addition to the numerous technical awards, it has won since its founding, the company received the Príncipe Felipe for Business Excellence Award in 2002.

<sup>5</sup> Graduated in Law from the Pontifical University of Comillas, he was an MBA from the Instituto de Empresa and at this School of Business he began his career in the research department and went on to become Associate Professor of Organization of Behavior and Communication. He is a member of the Committee of CSR experts of the Ministry of Labour and Social Affairs, of the Spanish Commission of the United Nations Global Compact, of the Patronage of the Chair of Ethics Javier Benjumea of ICADE, on the boards of directors of the Institute of Analysis of Intangibles and the Spanish Forum for the Main Brands.

*Corporate Social Responsibility and Social Report: A Case Study in the Basque Country DOI: http://dx.doi.org/10.5772/intechopen.105511*

**Figure 3.** *Identification of corporate reputation risks in Telefónica. Source: Own elaboration.*

All the general departments participate in the identification phase of the management objectives, with a total of 15 areas of analysis, which have identified their main operational targets. In the next phase, identifying the interest groups, the *Telefónica* Group is considered as a whole, identifying the relationships with the 40 types of agents, and the latter are categorized into eight interest groups: *Customers, Investors and Shareholders, Staff, Partners, Regulators, Providers, Agency, Media.* From what we read above, the partners and the media have been included in the list, which indicates the importance that the author of the project has granted them. Each area identifies the main relationships and the main comparison interfaces in the subgroups. The classification of interest groups in *Telefónica* has undergone some corrections, from the first version made in 2003, to the most recent and simplified version of 2005, which is used in the ordinary management. The risk identification phase of corporate responsibility was completed with the construction of a matrix, in which the forces in order are the interest group (the eight indicated) that could be affected by different types of risks, including *Financial, Communicative, and Management, Technological, Social* and *Legal*. The risks considered relate to the possibility of causing repercussions to the central corporate structure beyond their effects on isolated units. Although risks can be localized so as not to affect other units, such as the brand, one of the ongoing consequences of the global information environment is that, with an ever-increasing percentage of risks, they affect the entire corporate structure. More than 750 risks are identified, of which over 50% are included in the operational management,

corresponding to the daily activities that take place in relationship with the stakeholders. In the risk analysis, 150 were selected, considered critical, with treatment priorities, and the two selection characteristics were damage caused and probability of occurrence. To manage the risks appropriately, they have been grouped according to the intangible element that is affected; eight groups of intangible items were considered as indicated in **Table 2**.

The higher risk of intangible elements affects the strategy and organization of *Telefónica* with 30% of the total, but much importance is also assumed by CSR in controlling these risk factors with a 20% incidence. In the phase of *"contrasting the risks identified by the sectors of competence of the company,"* the relationship between consequences and their criticality was tested with the opinion of the *Telefónica* units that have experience in dealing with these certain risk factors. Thus, to counter the critical issues in the relationship with investors, the analysis was carried out by the Investor Relations Department with particular attention given to the shareholders of *Telefónica*, while the risks associated with the company regarding quality and the environmental issue, as well as the technological risks, were analyzed by *Telefónica* I + D. In the last phase, "contrasting the risks identified by the interest groups," different results are presented about the quality of the work carried out and the variables involved. Through this contrast, we get a) the external perception, which is always of great interest; b) information on the situation concerning other companies in the telephony sector, from which it is possible to obtain a "benchmark" concerning the best; and c) identification of the minimum management municipalities that minimize the reputational risks. To achieve this goal, we are working in three directions: 1. the creation of a self-management model: an integrated model of corporate reputation, *Modelo Integrado de Reputación Corporativa* (MIRC); 2. the definition of an institutional framework for *Telefónica*; and 3. a workshop on corporate responsibility.
