“Boeing is facing an investor backlash following two fatal accidents involving its 737 Max aircraft, with two leading shareholder advisory firms calling for a boardroom shake-up. Institutional Shareholder Services has told its clients that Dennis Muilenburg should be stripped of his dual role as chairman and chief executive. It has recommended the appointment of an independent chairman to help the aerospace group rebuild its reputation. Glass Lewis, a rival shareholder advisory service, has recommended the removal of the board’s audit committee head Lawrence Kellner for failing to foresee safety risks with the 737 Max aircraft.”Financial Times
April 17, 2019
A proxy adviser “has recommended the appointment of an independent chairman to help the aerospace group rebuild its reputation.”
Reputation crisis: disappointment, diminished trust, causing 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.
What’s your strategy?