Reputational Due Diligence – The key to strategic risk management

Screen Shot 2016-03-23 at 12.43.08Reputational Due Diligence supports the strategic risk management of business ventures in international markets. As introduced in the following article, the combination of Integrity Due Diligence with Political Due Diligence enables an investor to gain a comprehensive assessment of possible reputational risks attached to a business partner. This concerns compliance and corporate governance issues in relation to individuals and target companies as well as the reliability of the political environment in a specific country. The focus on ’human’ risks assigns Reputational Due Diligence a truly strategic attribute in the risk management process. The article discusses the relevance of reputational risk evaluation in the due diligence process. In addition, it expands on the numerous hidden sources of reputational risks than can be unveiled in the course of the Integrity and Political Due Diligence process. Examples and a case study serve to illustrate reputational risks as a serious business security matter. The benefit of Reputational Due Diligence consists of improving an investor’s chances to finding integer and reliable business partners and to enable him or her to protect his ventures from harmful political entanglements. Reputational Due Diligence ensures being in line with ’best practice’ regarding compliance and corporate governance rules. Moreover, it increases the transparency of surrounding business and political networks. Providing critical information for identifying hidden and connected reputational risks at an early stage contributes to an extended decision making basis with respect to foreign investments. As a consequence, management resources can be used effectively and transaction costs optimized. First published in German in BERLIN RISK BRIEF No. 6, October 2010

 

Full article can be found here.