March 12, 2019

“Between 2011 and 2016, under pressure to meet sales targets, Wells Fargo employees fraudulently opened millions of bank accounts for customers without their consent. Mr Sloan was appointed chief executive in October 2016 to clean up the mess. So far, his efforts have disappointed regulators.”

Economist Espresso
March 12, 2019

Mr. Sloan’s “efforts have also disappointed shareholders.”

Reputation risk: peril of stakeholders’ disappointment and anger.

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?