What is your reputation worth? Why it's important to manage third-party risks

What is your reputation worth? 

Why it’s important to manage third-party risks

Reputation can either drive value or destroy it. "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently,” said Warren Buffett in a 2017 interview. Most recently, the World Economic Forum released a report saying that, on average, more than 25% of a company’s market value is directly attributable to its reputation.

Reputation risk is inextricably linked to a range of business risks. A number of adverse events and risk scenarios can have an impact on reputation. Anything from ethics, culture and  compliance to cyber and financial risks can pose material damage to a brand’s reputation.  

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Proactive due diligence 

Let’s take culture, for example. Because social norms continue to evolve, behaviour that used to be tolerated, maybe even accepted in the past, is often unacceptable today. Missteps on hot-button topics such as diversity and gender, immigration, the environment and a plethora of other topics can quickly lead to outrage and censure across social media. 

These missteps can happen within the organization itself or within third-party business relationships. Increasingly, businesses are being held accountable for the “company they keep.” This is why it’s important for organizations to  be proactive when it comes to conducting due diligence on the individuals behind third-party relationships.

Somewhat surprisingly, too few businesses are paying enough attention to the actions of individuals behind entities. And, when they do conduct due diligence, it’s often done haphazardly and infrequently through static databases and manual online media searches. Given that online search algorithms change often, and the list of information sources grows by the day, manual searching is a painstakingly ineffective way to conduct due diligence. 

Real-time screening and monitoring

It’s why Valital combines human and artificial intelligence to help organizations identify, detect, analyze and mitigate reputation risks. Valital’s responsible AI-powered intelligent platform helps organizations stay ahead of unexpected reputation risks by using open-source intelligence to monitor and analyze adverse online news on potential and current business stakeholders — in real time.

Valital uses Natural Language Processing (NLP), a form of AI that enables computers to extract language from unstructured text. In other words, the AI learns human language and uses content and context to perform real-time search and pulse analysis of online media, blogs and tweets, flagging misconducts related to universally recognized misbehaviours: discrimination, financial crime/fraud, harassment, violence and abuses.

Verify, then trust

The old adage of trust, but verify isn’t good enough in today’s world. Verify, then trust means organizations can make better, more confident decisions about the people with whom they choose to do business.

Reputation risk scenarios are expected to proliferate, not abate over the coming years. In fact, a recent survey conducted by Willis Towers Watson of more than 200 global risk managers and executives found that 79.5% of them believe there will be more focus on reputation risk in the next five years compared to today.

Effectively managing reputation risk is not an option, it’s an imperative. And that means deploying real-time information and processes by using the right tools and technologies that will build reputational resiliency across the organization. 

What’s your reputation worth? Some would argue it’s an organization’s most valuable long-term asset. Something worth safeguarding at all costs.