science

RepRisk

RepRisk is a science topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand RepRisk rather than just read about it. In short: RepRisk AG is an environmental, social, and corporate governance (ESG) data science company based in Zurich, Switzerland, specializing in ESG and business-conduct risk research, and quantitative solutions. The company runs an online due-diligence database that allows clients to monitor and assess the risk exposure of companies, infrastructure projects, sectors, and countries related to 28 ESG issues.

Key takeaways

RepRisk belongs to science; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect RepRisk to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of RepRisk from memory before moving on to harder problems.

Reference excerpt

RepRisk AG is an environmental, social, and corporate governance (ESG) data science company based in Zurich, Switzerland, specializing in ESG and business-conduct risk research, and quantitative solutions. The company runs an online due-diligence database that allows clients to monitor and assess the risk exposure of companies, infrastructure projects, sectors, and countries related to 28 ESG issues. The issues are mapped to the 10 principles of the UN Global Compact, the Sustainability Accounting Standards Board (SASB) Materiality Map, and the United Nations Sustainable Development Goals (SDGs). On a daily basis, RepRisk assesses ESG risks such as environmental degradation, human rights abuses, child labor, forced labor, fraud, and corruption that can impact an organization's reputation, financial profitability, or lead to compliance issues. Financial institutions and corporations use RepRisk to prevent and mitigate ESG and business conduct risks related to their operations, business relationships, and investments. The RepRisk database systematically identifies ESG risks by analyzing over 100,000 sources per day in 20 major business languages. As of July 2020, the database covered more than 150,000 public and private companies, and over 40,000 infrastructure projects reported to have links to ESG risks, as well as ESG risks related to all countries and 34 different sectors. It also includes data on ESG issues and topics, over 20,000 NGOs, and over 15,000 governmental bodies.

History RepRisk was formed in 1998 as ECOFACT, a Zurich-based environmental and social risk consultancy focused on the financial sector. In 2006, its ESG risk database was created at the request of UBS, and in 2010, RepRisk split from the consultancy and became an independent company.

Methodology

Research scope and process RepRisk screens, on a daily basis, over 100,000 public sources and external stakeholders, including international and local print and online media, news websites, newsletters, NGOs, governmental bodies, think tanks, blogs and Twitter, in 20 major business languages. This screening identifies companies and projects linked to ESG-related risk. RepRisk monitors 28 ESG issues (for example local pollution, child labor or tax evasion) and 67 topic tags, or "hot topics" (such as palm oil, arctic drilling, indigenous people, coal, or water scarcity). The research scope is defined in accordance with international standards and norms, such as the ten principles of the United Nations Global Compact (UNGC) and Sustainability Accounting Standards Board (SASB). To achieve consistent data over time, RepRisk's database uses strict, rules-based processes that incorporate both artificial intelligence and machine learning with human intelligence. The following steps outline the high level RepRisk screening process:

Sources are screened through the company's proprietary AI tool that identifies risk incidents through text and metadata extraction from unstructured content, followed by multi-lingual de-duplication and clustering processes. An analyst studies adverse incidents, defines severity and novelty of each, using international standards. Relevant entities (companies, projects, sectors, and countries) are linked to the risk event, assigned a title, and a summary is completed. The compiled news passes a quality check prior to being released to the RepRisk ESG risk platform database.

RepRisk Index (RRI) The RepRisk Index (RRI) is a proprietary algorithm that dynamically captures and quantifies the reputational exposure to ESG and business conduct risks. The RRI is a quantitative measure ranging from 1 (lowest) to 100 (highest). Companies that have been exposed to higher levels of criticism in the past are less sensitive to new adverse events and allegations in comparison to a company that experiences a first-time incident. If a company does not experience new criticism, their score will eventually drop to zero over a maximum period of two years. A current RRI value indicates the current media and stakeholder exposure. The Peak RRI is an overall risk exposure indicator that indicates the highest level of criticism over the past two years. The RRI score is calculated based on a number of factors, including the influence of the source of the information, the frequency and timing of criticisms, and the novelty and severity of the criticism.

RepRisk Rating (RRR) The RepRisk Rating (RRR) is a letter rating (AAA to D) and is similar to a credit rating. It facilitates benchmarking and ESG integration. Available only to companies, it combines a company's own ESG risk exposure with the ESG risk exposure of the countries and sectors in which the company has been exposed to risks. Both the Rating and the RRI are updated daily for all companies in the database.

RepRisk UN Global Compact Violator Flag This indicator identifies companies with a high potential risk of violating one or more of the ten UNGC Principles. The flag allows users to see if the UNGC violations are primarily linked to the operations or to the supply chain of a company.

Data products and services

RepRisk data is available in various formats and products and is searchable online:

Benchmarking Briefs benchmark the ESG risk exposure for up to ten companies. Company Reports outline the ESG and business conduct risks for a single company, and are available via PDF. Supplier Monitoring Briefs and Portfolio Monitoring Reports are also available on a monthly or quarterly basis and identify companies in a supplier list or investment portfolio that are most exposed to ESG risks, and are most likely to violate internal policies, ethical guidelines, or international standards and are available via PDF.

Publications and research

Annual Most Controversial Companies Report Since 2013, RepRisk releases a yearly ranking of the top ten most controversial companies in the world, related to ESG issues. The ranking is based on the companies that have the highest RRI over a particular year.

Annual Most Controversial Projects Report Since 2013, RepRisk releases a yearly ranking of the top ten most controversial projects in the world, related to ESG issues. The ranking is based on the projects that have the highest RRI over a particular year.

… excerpt ends here. Continue reading the full article.

Illustrations

Worked examples

Example 1 — a first encounter with RepRisk

Start with the simplest possible case. Write down what RepRisk claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to RepRisk before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about RepRisk ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of RepRisk

In research: RepRisk appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses RepRisk in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: RepRisk is common in secondary-school and first-year university syllabi. It links to neighbouring topics 1998 establishments in Switzerland, Analytics companies, Companies based in Zurich, so understanding it makes those chapters shorter.
In everyday life: Look for RepRisk outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study RepRisk in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what RepRisk means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain RepRisk out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is RepRisk in simple terms?

Why does RepRisk matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study RepRisk?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on RepRisk.