Imagine this: you’re the VP of a team responsible for forging new partnerships and alliances with other organizations and one of your managers is working hard to cement an opportunity with a well regarded not-for-profit organization. The output of your combined efforts will be good for the local community and your corporate brand.
Your manager is a star performer and you trust him to handle all the negotiations. After all, he’s done similar work before. The deal is eventually signed and everyone is happy, until the office managing partner calls you in to explain why the firm has signed an agreement with an NFP that has questionable directors on its board. You’re shocked at what you learn after conducting your own cursory online search. Much to your chagrin, you learn that one of the individuals behind the NFP has a less-than-stellar track record when it comes to financial management. In fact, he’s been dogged with accusations of fraudulent behaviour.
Sadly, this incident really happened and similar scenarios take place more often than not. Luckily, everyone was able to keep their jobs and the organization was able to get out of the agreement.
Highly regulated industries and organizations that have significant brand equity care very much about the reputations of the people with whom they align themselves. Third-party due diligence is par for the course for these businesses. That’s the good news. The bad news is that though most businesses care about their own reputations, many don’t have formal measures in place to protect themselves. They may fail to vet third party relationships thoroughly. In the opening scenario, the business relied on the NFP’s seemingly solid reputation to guide their actions, likely concluding that the NFP will have done its own vetting of its own board members.
In some instances, executives take people’s track records, experience and reputation for granted, especially if they’re star performers or well known within an industry.
Why it matters
“Who steals my purse steals trash…But he that filches from me my good name, robs me of that which not enriches him, and makes me poor indeed.” - William Shakespeare.
Reputation can either drive value or destroy it. Reputation risk management is not only about downside risk protection; it also presents opportunities for value creation. Both boards of directors and chief executives continue to place reputation risk among their top strategic risks.
A wide swathe of Canadian organizations, even ones that are large and extremely profitable, still rely heavily on manual adverse news monitoring. That is, if they bother to do it at all. They don’t quite understand just how much more efficient, reliable and powerful an automated process can be. This is where artificial intelligence stands out, because human beings simply cannot efficiently and adequately sift through the deluge of publicly available online information that exists on potential business stakeholders at any given time.
Natural Language Processing (NLP) is a form of AI that enables computers to extract language from unstructured text. Through NLP, algorithms can understand content and context to identify, detect, analyze and potentially eliminate, mitigate or manage reputation risks.
How Valital can help
Valital’s AI-powered adverse media monitoring platform would’ve helped the organization in our above scenario to quickly and easily vet the individuals behind the NFP. Valital would have provided them with: