August 23, 2018

Rarely has the disconnect between negative media coverage and reputational damage been this clear. And it demonstrates in vivid and tangible ways how leaders of financial institutions need to rethink reputational risk – how to define it, defend against it and mitigate the damage when reputational events occur.

President Trump returns from Helsinki to a devastating barrage of negative media coverage and his poll numbers remain steady.

Facebook faces withering headlines over privacy issues and see no negative impact until months later, when additional revelations come to light and it becomes clear that fixing their problems is going to be more costly and complicated than they’d originally thought.

Wells Fargo agrees to a $2 billion settlement over mortgage backed securities issues and negative coverage appears in media outlets across the country – but there’s little or no impact on the company’s stock price or other financial metrics.

August 23, 2018
Global Banking and Finance Review

“Delegating reputation risk management to the marketing department…leaves directors and officers exposed.”

Reputation risk: Complex peril amplified by social media.

Reputations are valuable strategic intangible assets. Threats to these assets⏤ enterprise reputation risks, often mislabeled “brand risks” ⏤ need to be managed, and management needs to be overseen through reputation risk governance lest reputational damage or reputational harm result in long-tailed go-forward losses in economic value and/or political power. Because these intangible risks arise from the interplay of stakeholder expectation, experiences, and media amplification, parametric insurances for intangible asset risks, for reputational value, for reputational harm, and for reputation assurance help mitigate risk by telling a simple, convincing and completely credible story of quality reputation governance to stakeholders. This story telling effect is the expressive power of insurance complementing insurance’s better known instrumental power of indemnification.

Risk management, risk financing in insurance captives, and risk transfer through reputation insurances comprise the constituent elements of a comprehensive solution. What’s your strategy?