Motley Fool Smith & Wesson

“American Outdoor Brands “points out investors are well aware it is subject to the “ultimate risk” from advocates who would impose restrictions or ban private gun ownership. It details that hazard each year in its annual 10-K filing. The real risk to its reputation, the report says, would come if it failed to act in defense of gun buyers’ rights. It recounts the attempt by prior management to work with President Clinton on smart gun technology that caused its sales to collapse and “the Smith & Wesson brand almost ceased to exist.”


Smith & Wesson will not be changing its practices as a result of the shareholder resolution, and is more committed to maintaining its current path. American Outdoor Brands says pandering to its detractors would not enhance the company’s reputation. Instead, maintaining its image with gun buyers and those who support the Second Amendment “is more critical to the success of the Company and the enhancement of shareholder value.””

Motley Fool
March 7, 2019

“The real risk to its reputation…would come if it failed to act in defense of gun buyers’ rights.”

Reputation risk: Failing to meet expectations on matters about which stakeholders care.

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.

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