Reputation Advisor
Reputational risk is the fastest growing emerging risk. Exponential growth in social media and mobile technology has made it easier, cheaper, and faster for news to spread across the population. Businesses now face enhanced societal and regulatory scrutiny of their practises. Reputation is tightly coupled with emerging societal drivers, particularly in relation to environmental, social and governance (ESG) aspects and climate change.
Events that damage an organisation's reputation routinely cause financial loss, including loss of revenue, reduction in stock price, and loss of shareholder value. For example, the value of Facebook fell almost 40% in 2018 after a privacy scandal and a massive data breach\[CNBC\_2018\]. The World Intellectual Property Organisation (WIPO) has stated that intangible value, such as reputation and trust, is the most prized asset class on the planet. Their data suggests that 80% of company value is now composed of intangible assets.
ESG has moved from a fringe concern to the centre of business decision making. Consumers want to purchase products from companies that reflect their values, and investors want to know if they are financing activities that might pose a reputational risk. In order to develop and proactively manage long-term ESG-strategies that drive growth and reduce risk, organisations need to be able to monitor and quantify the impact of ESG-related reputational events and understand their triggers and implications.
Kennedys Law LLP, world-renowned in corporate and insurance law, leads a unique consortium comprising leading data and decision-scientists (University College London, University of Manchester), risk management and corporate strategy experts (RiskCovered, Cicero Group), and innovative insurers of emerging risks (Pen Underwriting) in the development of RepAdvisor, a solution that provides a real-time domain-specific reputational index for an organisation or sector and correlates this with financial indicators. This project will build the first reputational classifier trained with ESG domain-specific terminology and context, train an NLP neural-network to automatically analyse corporate documents and contracts for ESG-related risk, and an evidential reasoning model and assessment method to combine these factors into an accurate real-time ESG-index.
Our consortium enables us to comprehensively address the developmental barriers and supports user-centric design with a clear route-to-impact. RepAdvisor will be used primarily by i) organisations seeking to proactively manage and assess their ESG-strategies; and ii) insurers for the purposes of underwriting policies, adjusting prices, predicting potential liability policy triggers for claims. Additional end-user groups include asset managers, sustainable and impact investors, and financial institutions.