This seems to be concern trolling of Google.
I don't see a brand reputation risk. The user has to visit a 'bad' site to see the ad. How does the user viewing a big brand ad on a 'bad' site impact the brand when the user choose to visit the 'bad' site?
The ad revenue flowing to 'bad' sites is a valid concern, but with an easy fix. Google just needs to implement ad revenue sharing blocks on request or to comply with sanctions against countries.