The risk of embarrassment or loss of respect by people whose opinion is valued. From a personal perspective the relevant opinion holders may be friends, family, or business colleagues. In such cases the risk may be referred to as social risk. From a corporate perspective the opinion holders may be clients, suppliers, regulators, or other market players.
Example:
Asking someone out on a date. There is a risk that one’s feelings are not shared by the other person, and therefore a potential for embarrassment.
Downside Scenario:
The answer is ‘no’, The suitor is embarrassed and it takes him or her several years to work up the courage to ask someone else out.
Upside Scenario:
The answer is ‘yes’, and after dating for a few months, the relationship leads to marriage and sailing off into the sunset together, happily ever after.
Related terms:
Brand Risk
The possibility of negative publicity that erodes a brand and leads to loss of credibility and trust by its target audience.