Reputation risks: it’s time to seek them out

Reputation risk is one of those terms that sounds simple at first blush but a look beneath the hood shows it’s a complicated thing to unpack.

At Daymark we have been contemplating how to assess reputation risk for many years. The definition we most often use with clients is that your reputation risk is the difference between how your stakeholders expect you to act compared with how you actually do act.

But how do you define this risk in real terms?

One of our approaches has been to conduct two identical surveys about a company. One with the public and the other with employees. We put the same reputation damaging scenarios to each and looked at the difference in opinions.

For the purposes of the survey, we came up with a list of over 60 reputation damaging events and about 400 variations as to the severity of those events. (Survey respondents went through a ranking exercise first so that they did not need to answer over 400 questions, which would have been a reputation hazard itself.)

The results were insightful and did indeed rank reputation risks from top to bottom. However the insights relied on having a complete list of potentially reputation damaging events. The obvious problem being, what if we missed a potential event – say a black swan event?

At Daymark we are now up to version 5 of our reputation risk product we call Foresight. It has moved into a big data and machine learning environment where we look at de-identified email content to isolate patterns and issues.

Importantly, Foresight AI is issues agnostic, which means it does not need a long list of reputation damaging events to consider. Instead it self-learns the issues within an organisation.

It has been interesting talking to clients about Foresight AI. We estimate this digital intelligence approach brings issues to the surface many months before they may come to the attention of management.

Foresight AI has also confirmed what we have learnt about reputation risk over the years. That is, reputation damaging events typically arise from breakdowns in business processes impacting customers, employees or stakeholders. This is followed by a failure to pay due recognition to small but recurring system failures above the daily noise of matters before management teams.

If you think about a reputation event that has challenged your organisation we are sure it will demonstrate some of these features. Even crisis events tend to have their genesis deep and long held within an organisation.

Most if not all of our clients intuitively know and can name some of their reputation risks. But it is the ones they don’t know about that keep them awake. Maybe it’s time to look under the hood.