September 14, 2018

But for all that anger, the engineers of the American crisis response got the economics mostly correct, and more right than most of those — including leading economic thinkers and prominent politicians — who were second-guessing them.

It’s hard to overstate how deeply Americans despised their government’s response to the global financial crisis. It has helped shape the last decade of American politics, fueling distrust of powerful institutions and speeding a drift toward ideological extremes.

September 14, 2018
New York Times

“When you throw trillions of dollars at rescuing a system that most people don’t like very much, the result isn’t relief. It’s anger.”

By not managing the expectations of all stakeholders, those who saved the financial system “misunderstood what ‘success’ would actually mean.”

Reputation risk: peril of political/economic loss from angry disappointed stakeholders.

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?