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A Closer Look at the World’s Largest Private Equity Firms
During the last quarter Kroll reviewed 17 million items of digital chatter from July - September 2023, focusing on five key risk pillars that currently impact private equity firms the most:
Environmental impacts, such as allegations, accusations or narratives related to pollution, deforestation, climate change, habitat loss or species extinction.
Social issues, such as allegations that part of an associated supply chain employs forced labor, uses conflict materials or trades with oppressive regimes.
Governance failures, such as allegations relating to unethical practices, financial mismanagement, conflicts of interest, lack of transparency or inadequate oversight.
Financial insecurity, such as potential monetary insecurity, corporate fraud, bribery, insider trading or allegations of tax avoidance or evasion.
Cyber attacks, such as credible reports or allegations that the business or its suppliers have been the victim of cyber attacks and may be open to resultant fraud.
Findings from past indexes have shown evidence of digital chatter detecting an issue as early as six months in advance of a risk event happening. This quarter’s findings are no different. Higher scrutiny of portfolio companies resulting from global risk events has cast a wider spotlight on the investments of private equity firms:
- Digital chatter about portfolio company governance failures is quickly corresponding to discourse about mainstream social issues and employees’ livelihoods.
- Highly publicized striking unions are shining a bigger spotlight on worker’s rights and prompting online conversations about portfolio company labor practices.
- Summer climate events have ended, but their lasting effect is amplifying online scrutiny about portfolio company environmental footprints and ESG policies.
Learn more about Kroll digital chatter risk detection services for private equity here.
Digital Chatter Is an Essential Source of Risk Detection
Despite the challenges digital chatter creates for private equity firms, a growing number of general and operating partners are recognizing that this same digital chatter can offer a strategic advantage as a vital source of risk detection.
Effective risk detection relies on knowing where to look, identifying who is behind the digital chatter and understanding what is in the context of the content. This can only be delivered through a combination of advanced technology and expert human review. Adopting an advanced risk detection capability to keep pace with today’s global digital conversation happening 24/7/365 is essential to protect a private equity firm’s investment objectives.
For nearly two decades Kroll has combined Artificial Intelligence and Machine Learning able to analyze over a billion items per week with Human Intelligence able to continuously label those items and interpret their risk signals on behalf of our clients. This enables Kroll to stay ahead of who, where and what is talked about online, putting digital chatter into contextual, executive-ready actionable risk intelligence and delivering it to our clients.
Private Equity Risk Detect
Kroll protects clients throughout the entire deal cycle by scanning digital chatter to spot emerging risks and mitigate business impacts in real time. Kroll offers private equity digital chatter due diligence and risk monitoring, so that operating partners and deal teams are always first to know and first to act on a risk to their firm, funds, portfolio and third-party suppliers.