corporate reputation and risk management

©evolve24, 2010

Corporate reputation andrisk management

David Geddes, Ph.D.Vice President, Research & Developmentevolve24, a Maritz Research CompanySaint Louis, Missouri

New York, New YorkOctober 19, 2010

©evolve24, 2010

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About evolve24

• Global market intelligence through integrated analysis of traditional and social media

• Integrated enterprise platform– Real-time document aggregation– Smart Content through advanced processing and analytics– Deep understanding of audience segments– Leading indicators of market shifts, risks and opportunities

©evolve24, 2010

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Approach

1. Document aggregation

2. Data processing

3. Analytics and rich tagging– Sentiment– Reputation– Risk– Topics and issues

4. Insights

5. Strategy and tactics

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Visualization of SmartContent

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What is corporate reputation?

• Collective representation• Past behaviors• Expectations• Relationships

• Networked world

Sources: Duncan J. Watts & Peter S. Dodds (2007). Influentials, networks, and public opinion formation. Journal of Consumer Research, 34 and Communications Executive Council (2010). Influencing stakeholders in a networked environment.

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Where does reputation come from?

What they do

Reputation

Customer experience

What they say

What is said about them

Actions

Words

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Where does reputation come from?

Corporate actions

Mainstream media

Stakeholder impact

Customer experien

ce

Media

Mainstream media

Social / WOM

Social / WOM

Exchange Relationship

s• Stakeholde

rs• Publics

Reputation• Cognitive

& substantiv

e• Affective &

evaluative

Social / WOM

Mainstream media

Customer impact

Business outcomes

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Why does reputation matter?

Resource

Capital asset

Sustainable competitive advantage

Intangible

Organizational goals

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What links Smart Content and reputation?

• Agenda-setting theory– Scientifically-validated– > 400 research studies– Experimental studies– Corporate reputation

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What is risk?

• State of uncertainty• Some of the possibilities involve a loss,

catastrophe, or other undesirable outcome• Psychometric emotional risk model

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How do we manage using Smart Content?

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REPUTATION MANAGEMENT AND MUTUAL FUND CASH FLOWS

Smart Content Case Study

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Situation

• Leading mutual fund company• Cash flows

▲Industry peers ▼Client company

• Management assumptions• Investment drivers

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Approach

• Regression analysis of cash flows on financial variables and reputation

Figure 1: Cumulative Funds Flows and xxxxx Reputation Equity

(50,000)(40,000)(30,000)(20,000)(10,000)

-10,00020,00030,00040,00050,00060,00070,00080,00090,000

100,000110,000120,000130,000140,000150,000160,000170,000180,000190,000200,000

Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07

fun

ds

flo

ws

($ m

illi

on

s)

(7,000)

(6,000)

(5,000)

(4,000)

(3,000)

(2,000)

(1,000)

-

1,000

2,000

3,000

Rep

uta

tio

n E

qu

ity

Cumulative Funds Flows (xxxxx) Cumulative Funds Flows / 10 (industry) Reputation Equity (xxxxx)

Fund reputation

Fund $ inflows

Sector $ inflows

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Result

• Primary drivers are financial• Significant role for reputation (R = .74)

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Application

• Communications and outreach program– Trust– Performance

• Largest gain in net flows in company history

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REPUTATION MANAGEMENT IN PHARMACEUTICALS

Smart Content Case Study

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Situation

• PharmCo, a major pharma company• FDA-ordered recall• Branded nutritional product

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Challenge

• Listen• Organize and share• Understand stakeholder opinions

– Cognitive– Emotions and risk factors– Messages

• Identify• Engage• Fix

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Who was in the discussion?

Favor ab

ility

VisibilityLow High

High Tonality & Volume Matrix

Physicians Retailers Regulators Media

Parents Health Organizations Consumer Groups

- Dr. Joseph Gigante- Dr. Robert Insoft- Dr. Elena Rossi- Dr. Bryan Wohlwend

- Meijer- Wal-Mart- Publix- Walgreen's

- FDA - Ed White- Lindsey Tanner- Ransdell Piersen

- Women, Children, and Infants (WIC)- Consumers Union- Stephanie Roseman- Sheri Weber

LEGEND

FavorabilityThe tone with which the brandor corporate name is mentioned

VisibilityThe media volume associated witheach actor

Visibility

Sentiment

Doctors

RetailersConsumer groups

Health orgs. Regulators

JournalistsParents

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What were stakeholders saying?

Stakeholder Key concerns

Health organizations • Share information

Medical professionals • Reassure parents

Consumer groups •Open information access

Parents• Loss of trust• Safety concerns• Quality• Price

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What were the emotional risk factors?

Tuesday Wednesday Thursday Friday Saturday Sunday

Emotional risk in product recall discussions

Top 5 of 19 risk factorsVulnera-

bilityDread Irreversa-

bilityLack of control

Untrust-worthy

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What were social moms saying?

• Small reputation impact

• Emotion drivers– Uncertainty– Irreversibility– Vulnerability

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RISK MANAGEMENT AND ALTERNATIVE ENERGY

Smart Content Case Study

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Situation

• Global manufacturer• European Union 20/20 alternative energy

initiative• Corporate strategy and policy teams• European fiscal crisis• Political winds• Where to invest?

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Challenge

• Monitor• Organize information• Gauge opinion• Weak signals• Threats• Anticipate• Reach out

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Political risk analysis by energy source

Risk score

Volume

Events

Weekly risk

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Political risk analysis: Wind by country

Risk score

Volume

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Political risk analysis: Topics and issues

Risk score

Risk contribution by topic

Offshore wind

Wind & economy

Energy & jobs

Wind opposition

Wind & jobs

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Influencers

Companies & organizations

People

Influence

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Political risk analysis: Wind summary

• Increased discourse▲Wind▲Renewables

• Wind▼More negativity

• Energy and financial crisis▲France, Spain▼UK, Ireland, Greece,

Bulgaria

• Offshore vs. onshore▲Debate

●Polarization

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SUMMARY

©evolve24, 2010

QUESTIONS?Thank you