New risks necessitate new risk management tools

We see it in the news, and we hear it with business leaders: reputational risk is rising right alongside market uncertainty. That means the way we validate employees’ and business partners’ conduct matters more than ever.

As early as 2012, World Economic Forum research pegged 25% of a company’s market value as directly attributable to its reputation. In the years since, surveys have shown more than 40% of companies that experienced a negative reputational event felt it most in revenue. They also saw ripple effects across lost brand value, and regulatory investigations. 

Today, COVID-19 is taking that to entirely new heights. Because people can move your reputation forward or hold it back, the pandemic is causing a veritable perfect storm of risky reputational pitfalls.

How? More of us are working from home than at any other time in history, making trust tantamount to your company’s success. Teleworking means less facetime between colleagues and teams, or even recruiters and candidates. In some cases, it’s also making it harder to cultivate corporate culture, or apply internal controls. Compound that reality with so much online information to sift through as you vet individuals, and the risks increase. In the face of all those factors, the intelligence we rely on must be truly credible. Anything less can hit reputation – and bottom line – hard.

Whether someone’s opening the door to phishing scams or conducting themselves publicly in ways that counteract your corporate culture: enterprise risk management processes now need better ways of scanning for the kind of misconduct that hurts corporate reputations. 

This year, our team’s been working in entrepreneurial overdrive to find a better way forward. We’re asking big questions, like: how can we ensure continuous code of conduct adherence even as teams work apart? How can we foster a culture grounded in our values with so many colleagues working remotely? Are there ways to onboard people quickly while mitigating the risks their prior conduct might bring? And above all: if an employee or contractor is conducting themselves in a way that contradicts what we stand for, how do we find out quickly enough to take action?

One-time manual online searches can’t answer those questions in a market where the risks themselves are moving targets. That kind of old-school conduct validation requires more people and more time, while failing to guarantee a comprehensive view. That goes double if you’re vetting thousands of employees a year. Live updates on individual conduct are now a business imperative for functioning effectively in this high-risk environment. After all, the longer someone’s misconduct unknowingly exposes you to reputational risks, the more the situation could cost you. 

Times are definitely different. Even so, the old adage still rings true: knowledge really is power. If you could have greater clarity on how individual conduct may be exposing your business to unnecessary risk, why would you hold back?