Three Big Risks of Missing information: Liability, Reputation, and Financial Loss

01 Jan 1970 1:00 am

Making sound business decisions requires a significant amount of research and information gathering. Without knowing the history of a company or the market trends of the industry, your company can be exposed to liability concerns, reputational risks and financial losses.


Pharmaceutical companies are quite familiar with the process of approval, safety regulations and extensive testing on drugs before they are made available to the public. Continued information gathering even after a drug has been approved is important to ensure the safety of consumers and to avoid a potential legal issue if those consumers are adversely affected.  According to a book published by the National Academies of Sciences, Engineering and Medicine, post-marketing surveillance is critical to minimize the risks—in this case, of a new drug. “Because initial safety testing is limited to small groups of volunteers… safety problems have been discovered with some drugs long after marketing approval. These safety issues have had tremendous costs, both in dollars and, far more importantly, in lives lost or persons harmed by the drugs.”  Along with monitoring safety issues, it’s important to understand news about similar products, key competitors and industry regulations that may shift and introduce new risks. Continued research to gather pertinent information can help keep liability at a minimum.


Having incorrect or incomplete information can lead to false statements, inappropriate claims or a scandal. When missing information, there is opportunity for costly reputational risks.  Not all businesses operate in an ethical manner with wholesome business practices. For example, if your company is interested in purchasing another company, you need a solid understanding of all aspects of the new-to-be-acquired business. Extensive research of the inner workings, practices, financial history, manufacturing practices, and backgrounds on key stakeholders is critical to truly understanding a company. From improper sourcing to bribery to political ties, if you miss a controversial piece of information about their manufacturing practices yet acquire the company without knowing this, your company’s reputation is at risk. Your customers, partners, shareholders and more can view improper background research as a blow to your company’s leadership and future growth.  Knowing everything you can about a company and how their businesses practices align with your own is imperative before entering into a business relationship.

Financial Loss

Since the 1970s, American businesses have set up shop in other countries like China, in the hopes that the powerful corporations will flourish in the People’s Republic. But the reality is that many of these businesses fail quickly for a variety of reasons. “Some suffered from a lack of flexibility, or a failure to localize,” writes Benjamin Carlson for CNBC. “Others fell because of bad timing, or a superior local competitor. While the causes are as varied as the industries themselves, a pattern can be discerned among the biggest failures in China: an inability to grasp just how different — and cutthroat — the Chinese market can be.”  Without a solid understanding of a foreign market, companies can struggle to thrive (or even simply survive) because of their lack of basic market practices and industry nuances. Gathering information about current market conditions and trends can be crucial; without it, your business is destined to struggle to learn on-the-go likely losing money and potentially failing in the new market. Having the right background information and performing extensive industry, news and regulatory research on a particular market, especially one as tricky as China’s, is integral to making solid decisions.  "It's a lack of understanding of the legal and cultural environment that leads to most failures," says Shawn Mahoney, managing director of the EP China consulting group.  Ultimately, gathering information and educating your decision makers is critical to ensure you’re able to take on the competition. Having a solid base of information will help to reduce the risks posed to your business and can potentially avoid liability, a tarnished reputation, and financial loss.  For more information about the risks of missing information, download our whitepaper.