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Why Managing Reputational Risk is Key to Your Business Success

April 24, 2023 (3 min read)
Managing risk with a solid reputational risk management process

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. While some companies continually rank high in the hearts and minds of Americans (Trader Joe's and Patagonia regularly top the list), others have seen the impact that negative news coverage can have on consumer sentiment. 

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. Here are ways to keep apprised of adverse media monitoring to mitigate any hits to your reputation. 

How to mitigate reputational risk with adverse media monitoring

Regulators increasingly expect organizations to have adverse media monitoring in place for their own company and all high-risk relationships to keep track of financial crime, bribery, and corruption. That seems like a tall ask—especially in an age where digital media has both increased news volume and accelerated the spread of news and misinformation. In this section, we'll go over what you should consider when managing your reputational risk and tools to help make the process more efficient.

Creating a reputational risk management framework

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.

Due diligence solutions make 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.

MORE: How to Deal with Negative ESG Coverage

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.”

Get ahead of risks to your reputation

Do you have the right sources and technologies in place to stay ahead of potential reputation risks? Whether you're paying attention to negative news coverage, doing your due diligence with research solutions, or monitoring the current business landscape, the right technology can help streamline your process and efficiently embed risk management into your routines. 

Don't know where to start? See how Nexis Solutions helps organizations keep pace with reputational risks—including those that can negatively impact your brand—and your bottom line.