“Insurance options from firms like Steel City Re can shield companies in two ways. First, it helps protect short-term cash flows.
‘One part of our insurance is the instrumental value, which tells creditors that the short-term cash flow is protected because there is contingent capital. This improves bond ratings and risk profiles, which raises your earnings multiple,’ he explains.
Secondly, insurance can create “expressive value” for the company.
‘The expressive side tells about the company’s governance, which indicates that a firm is in control of the big six risk areas and is more likely to behave in a way stakeholders expect. It says that the products are safer and that regulators can manage your company with a softer touch,’ Kossovsky explains. ‘It indicates that you can trust the company because you can trust the leadership.’”
March 19, 2019
“Kossovsky says that by just going through the process of getting reputational insurance, a company can better pinpoint where it’s most at risk.”
Reputation insurance: indemnification affirming trust and reducing 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.
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