Insurance-focused law firm Kennedys and a consortium of academic bodies and risk companies have been awarded £0.78m by taxpayer-funded Innovate UK to build a digital index that charts companies’ reputational risks.
The project to build the ‘Reputation Advisor’ product will cost £1.2m, with £783,000 from Innovate UK’s Smart Grants scheme, which supports research and innovation in business that benefits the economy, and the remainder will be covered by Kennedys and its fellow consortium members: The University of Manchester, University College London, Cicero/amo and RiskCovered Limited.
All well and good, but what is it?
Kennedys, which now has a long track record for developing its own tech tools for insurance clients, said that the solution ‘will be developed to analyse content – from corporate documents to publicly available information – to create a real-time reputational index of any risk relating to an organisation’s corporate citizenship via ESG (environmental, social and governance) practices that impact on a company’s bottom line’.
What will the end result look like? They said that the software will:
- ‘analyse internal documents, such as corporate reports and contracts, plus any other information in the public domain,
- then generate risk profiles and ratings, allowing firms to manage risk based on robust evidence, as well as being able to explore and plan for different scenarios.’
It will be built by the Kennedys IQ group over the next 18 months and be offered as part of the group’s product suite to its clients.
But why the reputation part? ESG is a wide field, after all.
This is what they said: ‘Reputation risk is considered as an intangible asset that is rising in company value. According to a joint Lloyd’s of London/KPMG report, the importance of intangible assets has grown to more than 85% of asset value, with reputation and brand identified as the most important. If triggered, the risk can result in huge financial losses such as those suffered by Facebook in 2018 when its stock plummeted following a massive data breach and privacy scandal.’
Deborah Newberry, (above centre) corporate affairs director at Kennedys, said: ‘The ongoing ESG momentum is likely to lead to a new chapter of reputational risk insurance. I expect to see a market shift in optimising existing products that add on reputational risk, such as D&O and cyber security; or towards initiatives that offer standalone coverage of reputation as a discreet hazard.
‘However, insurance alone cannot be the solution. Firms must be able to accurately monitor and measure the impact of ESG-related events as part of an effective risk-management strategy. Current systems for building in reputational resilience are limited – largely because the data relied upon is unstructured, uncertain and incomplete.
‘Reputation Advisor will be designed to solve that problem, for the first time giving businesses the tools to accurately measure their ESG rating and proactively develop strategies to manage their sustainable reputation going forward.’
Project director Karim Derrick (above left), product and innovation director of Kennedys IQ, the separate business launched by Kennedys in 2020 to offer technology products to clients, said: ‘Our technology work builds on that of our academic partners, combined with legal expertise, scaffolding human judgment for improved consistency. The benefits and opportunities are huge.’
And Richard West (on right), Head of Client Innovation at Kennedys, concluded: ‘Reputation Advisor is testament to just how far Kennedys has come in developing technology-based solutions for our clients based on emerging real-world problems. It also demonstrates that we listen to our clients and their customers in order to evolve.’
All in all another interesting example of the UK Government funding legal tech projects. Good to know where all our taxes are going. (Although it does indeed seem to be a good cause – if it can make some of the world’s largest companies care a bit more about the people on the other end of the equation.)
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