One of the company's representatives at the CPO - CXO EVENT on procurement, which takes place in Liverpool on 23rd June, Datta recently offered his thoughts on how to mitigate reputation risk through access to information on private company information.
In this discussion he addresses three key questions: what reputation risk is; why it's of increasing concern; and how you can establish a reputation risk management program.
What is reputation risk?"Reputation risk exists where performance or conduct of an organisation falls short of the expectations of the stakeholders," says Datta. "We think here about customers, shareholders, the general public and the wider media. It's unquestionably a very real threat to big business." To bear this out, he highlights that findings from 2012's World Economic Forum showed that 25% of a company's value is now linked to its reputation.
Datta classifies the drivers for reputation risk into two streams: direct and indirect.
"Direct is the conduct or controllable influence of that company," he explains. "We think here about ethics: fraud, bribery and corruption. Security breaches, both physical and cyber. And failings of products and services linked to health and safety."
And of the emergence of the indirect stream? We see "companies held accountable for the actions of their third parties: their supply chain, distributors, agents, partners," he says. "This is the area of most concern as companies have the least amount of control."
Why is reputation risk of increasing concern to your clients?According to Datta, "the first and very practical reason where reputation risk is of increasing concern to our clients is that it’s firmly established as a board-level issue."
He adds: "We've seen a number of CEOs fall on their sword recently because business failings are magnified by the lens of reputation loss." Alluding to the recent Volkswagen emissions affair, he suggests that it's "no wonder therefore that large enterprises are overhauling institutional governance via committee and thinking more dynamically about addressing risk in this area."
Datta identifies the second key driver as "the prevalence and influence of social media in setting the agenda".
We've all heard of the so-called Newspaper Test, used to forecast damage to a company's reputation from adverse headlines. But Datta believes that "the Twitter Test is probably more indicative of the landscape we find ourselves in in 2016."
How do you outline and establish a reputation risk management program?"So we think there are four stages in outlining and establishing a reputation risk management program," says Datta.
The first, he says, is "to identify but crucially prioritise the stakeholders that drive the value of your organisation. We think here of the merging of third-party interactions with your own."
The second, he continues, is "to audit your position against [these stakeholders'] expectations. Identify vulnerabilities and gaps. On a high level that's people and process. On an application level it's technology and increasingly data." As an aside, he notes that "in a complex world, crisis management is a consequence of doing business."
The third stage is what Datta describes as "break[ing] down traditional silos".
"Reputation risk is pervasive across a number of traditional reporting lines," he explains, "and response times to issues is paramount in limiting a negative impact," something that is better achieved with the right channels of communication.
The fourth and final stage, according to Datta, is to draw out the ideal solution. "[Bureau van Dijk's] world revolves around delivering global market intelligence," he says. "Our clients are therefore focused on what content, delivered how often and to whom, in order to underwrite an effective risk management strategy."
To discuss how access to our content and workflow platforms could help protect your company's reputation and identify the most reliable suppliers to work with, please book a meeting with Datta and his colleague, Polly Taylor-Pullen, at this event – or contact us at [email protected] if you're not going to be there.
View the video on which this blog post is based: