Practical applications of reputation

Let's play a quick game of word association.

Reputation

...

Did you say "PR"? Certainly, that's one group that has a major concern with reputation in business.

If you spend too much time online, as I do, you might have come up with "search engine," especially now that mainstream media have picked up on the existence of search engine reputation management.

Our grandmothers might have thought about what the neighbors think, but these are all the same thing. They're concerned with what others think about us.

Turn it around
What if a company were to apply reputation-monitoring techniques in evaluating potential business relationships? They could use reputation, not as it reflects on themselves, but as a source of insight into the other party.

Enter Ecofact, a Zurich-based consulting firm that advises clients, mainly in the financial sector, on business risks associated with global issues: the environment, social issues and human rights. Their new RepRisk service is a web-based due-diligence tool that evaluates potential reputational risks associated with proposed business deals.

You've probably seen charts like this based on sentiment or message volume. But this chart indicates the target company's negative associations with major issues as an indicator of the risk involved in a particular deal or project. The metric incorporates quantitative and qualitative views of exposure on pressure group web sites and in the media (social media evaluations are more experimental for now).

Imagine you're a commercial bank evaluating a loan prospect, or a manufacturer looking for offshore production partners. If Human Rights Watch or the National Labor Committee had targeted your potential borrower/supplier for its practices, would that factor into your decision? Reputational risk is contageous, you know.

Media analysis, but not marketing
RepRisk is an example of something I think we'll see more of: practical applications of media analytics for market intelligence outside of marketing functions. The source data and analytical techniques have much in common with typical practices in social media analysis—the difference is in the customer base and objective of the analysis.

In the end, an appreciation for reputational risk in business decisions means that the traditional concern for one's own reputation—and its potential financial impact—has been fully internalized. RepRisk is an application for businesses who've realized that one way to protect their own reputation is to choose carefully the company they keep.

Tags: RepRisk social media analysis