Reputation value is measurable and therefore it is manageable and insurable. In an attempt to help companies manage and insure that value, Steel City Re has compiled this Solution Executive Summary .
In fact, most companies still mistakenly confuse reputation with public opinion. It can be a very costly misunderstanding. The media amplifies the crisis once it is set in motion, but it is not the cause of a loss in reputational value.
Reputation risk is a material peril of economic harm from angry disappointed stakeholders. It is the gap between those stakeholders’ expectations and the reality of their experience with any given entity. Nine out of 10 companies today mention reputation, its materiality, and the gravity of its loss in their annual reports. But very few detail the steps they are taking to mitigate the risk, leaving themselves and their boards in the position of setting expectations (they recognize the risk), but then disappointing stakeholders when an incident occurs by their failure to have employed appropriate mitigation strategies.October 27, 2018
American Law Institute Adviser
“Nine out of 10 companies today mention reputation, its materiality, and the gravity of its loss in their annual reports.”
Reputation crisis: disappointment, diminished trust, causing economic losses.
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?