Reputation Risk: Measured

Reputation Risk: Measured

Peter Mitic

Santander UK, 2 Triton Square, Regent’s Place, London

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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.


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

1. Introduction
2. Reputation Measurement
3. Reputation, Sales and Profit
4. Results
5. Discussion and Summary

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