Abstract
Reputation management is based on digital platforms and tools such as monitoring mass or social media, compliance facilities, and trade credit ratings. The digital instruments extensively utilize various methods of artificial intelligence, machine learning, and predictive analytics, including neural networks and natural language processing (NLP). The computational tools simplify managerial challenges, though assume their users to understand the whole scope and logical structures of data management. Opinions about a company, person, product, or a country are important, but financial consequences of reputational triggers are even more valuable. Reputation management merges with credit and compliance risk assessment both in regulation and in corporate practices.
TopIntroduction
The true mystery of the world is the visible, not the invisible
Oscar Wilde
The Chapter covers a growing intrusion of digital data technologies into the corporates’ business. The digital solutions, on one hand, bring opportunities for better client targeting and engagement, and, on the other hand, open companies to the new reputation risks. While the reputation risk matters.
An increase in computing power and a variety of tools for data distribution and processing can transform company's informational practices and policies to match expectations of stakeholders. Regarding the information disclosure, the author makes a conclusion that both public and privately held companies are quite transparent for external views within the existing trade credit infrastructure. Therefore, stakeholders expect a business governance to match the best practices of global corporate codes, including information disclosure, ethics, anti-bribery behavior and the others.
The author highlights that while information migrates from traditional information channels into the internet digital ecosystems, flooded with fake news and trash logics, businesses have to detect and distinct logically true facts from the massive digital seagulls, polluting the big data ecosystem with false and unverified patterns, messages, hashtags, and key words. This means processing big data is to be used very carefully for marketing campaigns as well as for defense purposes.
The Chapter includes the cases that link reputation management with monitoring of credit and compliance risks of a counterparty and outline a methodology of managing the risk of loss of business reputation in credit institutions and banking groups as a sample, applicable for many businesses.
This Chapter investigates key points of digital transformation and challenges for the senior executives, which relate to the basic principles and trends for communications, formal standards of disclosure, as well as reputation risk mitigation.
According to (Gupta, 2018), companies go through digital transformation in three stages. The first stage usually involves technology to reduce cost and improve efficiency in existing business operations… In the second stage, companies open up their technology platform(s) to clients… In the third stage, companies tend to move to a platform strategy by opening up their system(s) to third-party players, sometimes even competitors.
Digital platforms have altered the communications landscape. Research of digital transformation practices has been undertaken at MIPT in 2019. The interim results from a business sample of 92 filled in questionnaires representing diversified industries and positions (Appendix 1, Figure 3, Distribution of business population by digital transformation stages (Source: MIPT, 2019), Figure 9Industry Breakdown (Source: MIPT, 2019)) reveal that 48% of responders use third party digital tools for their business purposes; 29% participate in improvement of an own technology solution; 24% point out that their company’s digital platform is now open to clients or third-party contractors.
Key Terms in this Chapter
Reputation Risk: The risk of losses due to an impact of reputation risk factors.
Digital Marketing: A general term used to refer to the targeted and interactive marketing of goods and services to attract potential customers and retain them as consumers by using digital technologies. The main advantage is the measurability of its results.
Information Disclosure: Ensuring the availability of material information about a company or a person to any number of interested parties in accordance with a procedure guaranteeing the data retrieval and receipt, including: information that the [company, person] is obliged to provide in accordance with the requirements of the applicable legislation; information that the [company, person] provides on its own initiative or at a request of a stakeholder.
Business Reputation: A qualitative assessment of the company's activities as well as the actions of its owners, affiliates, subsidiaries, and affiliates.