Why Monitoring for Reputation Risk Needs to Be a Central Focus of Your Company's Risk Mitigation Strategy

Are you managing reputational risk as effectively as you should? Every year, the Axios Harris Poll 100 surveys 40,000+ Americans on companies on consumers’ radar—for good or for bad. Then, the Top 100 companies on the list are ranked across seven key dimensions of reputation. Analysis of the rankings shows a worrying trend: Corporate reputations are taking bigger hits from adverse events. Global Finance points to the successively larger reputational declines:

• 2017—Wells Fargo dropped 24 spots over the headline-making account fraud scandal and CEO resignation that resulted from it.
• 2019—Facebook dropped 43 spots following wide media coverage for alleged misuse of data misuse and use of the platform to influence elections and spread misinformation, disinformation and hate speech.
• 2020—Boeing dropped 65 places as a combined result of 737 Max disasters, supply chain disruptions and excesses of executive compensation dominated the new.

Of course, it’s hard to quantify the value of a ranking like the Harris Poll 100. But research into reputational risk and financial performance conducted by Oxford Metrica on behalf of global consulting firm PwC found that when organizations respond proactively to an adverse event, they experience “a 25% premium in share value” compared to those that have not. Clearly, it pays to keep reputation risk on your radar.

Integrate adverse media monitoring into your risk mitigation process

What’s more, regulators increasingly expect organizations to have adverse media monitoring in place for all high-risk relationships to address financial crime, bribery, and corruption. How do you do that—especially in an age where digital media has both increased news volume and accelerated the spread of news and misinformation?

Start by automating the process. Time is of the essence when your corporate reputation is on the line. To manage both the volume and velocity of round-the-clock news—not to mention other reputation-endangering factors like association with third parties found to have acted unethically or irresponsibly—you need a consistent, continuous process. By automating the process, you enhance visibility into potential red flags while also freeing up human resources for further investigation and analysis.

An out-of-the-box solutions like Nexis® Entity Insight makes it easy to align third-party monitoring to your organization’s risk appetite using a PESTLE framework. You prioritize risk across political, economic, social, technological, legal, and environmental factors. Entity Insight does the heavy lifting, continuously surfacing potential threats and displaying them in an easy-to-decipher dashboard that highlights mentions of key suppliers or other third parties in sanctions lists and across an unmatched collection of global news sources. It also offers insights into the financial stability of the third parties your organization relies on.

Want to integrate adverse media into in-house risk management systems, robotic process automation or AI-enabled analytics? Nexis® Data as a Service makes it simple, with customizable adverse media feeds that deliver relevant data via flexible APIs.

Ask the right questions when negative news is uncovered. Martin Woods, a former detective turned compliance officer, writes in Compliance Week that when adverse media monitoring surfaces potential threats, risk professionals need to consider a variety of factors—from the age and number of negative media reports to any mentions of litigation. He also recommends asking questions like:

• Does the media group have a known political bias that may be relevant to the assessment? This is critical in the age of fake news, misinformation and disinformation. Multi-source verification of adverse stories can bring clarity so that you aren’t inadvertently led down a rabbit hole because news has been distorted.
• Does the media alert align with what you already know about the third party? If not, can the third party answer any questions you have regarding the negative news?

By evaluating the source of the news—as well as the news itself—you will be better positioned craft a response that protects your organization more effectively. As Woods notes, “Doing nothing with negative media alerts is not a good strategy. For sure, some reports can be expediently dismissed, because of political motivation or the minor nature of some allegations, but all negative media alerts need to be resolved and be seen to have been resolved, appropriately.” Do you have the right sources and technologies in place to stay ahead of potential reputation risks?

See how Nexis Solutions helps organizations keep pace with third-party risks—including those that can negatively impact your brand—and your bottom line.