“Incorporating the newer, more accurate definition of reputation into their entire risk management process — identifying and quantifying the risks and taking clear steps to mitigate them — is the way financial services firms can best defend themselves from the reputational tornados that cause devastation in the industry, particularly with virtually every downturn of the economic cycle.”
American Banker
March 29, 2019
“Taking clear steps to mitigate (reputation risks) — is the way…firms can best defend themselves from…reputational tornados.”
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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