Source:- ACL Blog
However, there is another type of risk that analytics can be used to address, and it is also very important: reputational risk. An organization’s reputation may very well be its most valuable asset. Damage to an organization’s reputation can have a direct impact on its bottom line, ability to grow and, in some instances, ability to continue as an organization. Determining an effective way to manage this risk is a challenge to most organizations. Most often done through public relations and marketing, there is another way to help manage this risk: analytics.
How can analytics be used to manage reputational risk? By leveraging data that addresses the organization’s reputation. This data is most commonly available in public forums where customers, critics and others are discussing an organization. In 2016 that means social media activity, blog posts, message board discussions, internal email communications and review sites. These data sources contain large amounts of unstructured data, i.e., data that is not organized in a column/row structure, most often free-form, generated by humans and contextual in nature. The important takeaway here is that these data sources are just that, data sources. They contain data just as the financial systems commonly analyzed contain. The difference is the initial capture and ingestion of the data. There are now a variety of tools designed to capture this information and prepare it for analysis. Ignoring these data sets because they are unstructured is a mistake.
Analytics for managing reputational risk fall into two categories, quantitative and qualitative.
Some important information about the reputation of an organization can be derived from quantitative analytics. These include:
The information derived from qualitative analytics helps identify how the organization is viewed, i.e., the reputation. These include:
While all of the analytics described above are individually beneficial, combining the quantitative analytics, qualitative analytics and existing financial based analytics, allows you to create a detailed analysis of you organization’s reputation. For instance, you can identify the negative issues in the market, the specific location of the discussion and related events from within your organization.
Applying analytics to reputational risk provides a means for your organization to address potential issues in the market before they turn into crises.