WIT Press


REPUTATION RISK: MEASURED



Price

Free (open access)

Paper DOI

10.2495/SAFE-V8-N1-171-180

Volume

Volume 8 (2018), Issue 1

Pages

9

Page Range

171 - 180

Author(s)

PETER MITIC

Abstract

Two principal results for reputation risk are established. First, reputation risk can be measured in terms of a single index, arising from a data mining process directed at the opinions in a complex multi-agent network. Second, the results of the measurement process, gathered over an extended period, can be expressed directly in monetary terms by finding a correlation between the daily changes in the index and in sales. Stressed periods are modelled by calculating value-at-risk using a ‘loss-distribution/ scenario’ approach, as for operational risk capital. The short-term effect of reputation risk events on sales and profits can be significant in absolute terms, but is small as a percentage of total sales. Negative reputation has a more significant impact than positive reputation.

Keywords

Reputation, Reputation risk, alva, sentiment analysis, correlation, Loss Distribution, Scenarios, stressed