Corporate social responsibility is not reputation insurance. “All their good works did not prevent Andrew Carnegie and John D. Rockefeller from being remembered as robber barons. The Sacklers are a target for protests partly because the family name appears on so many buildings, not in spite of that.”Economist
April 1, 2019
“Those who decry the laundering of corporate reputations through charity forget something: it does not work well.”
Reputation insurance provides indemnification affirming trust and reducing economic losses. CSR is not reputation insurance.
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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