“Twenty to thirty years ago, a company would tell the insurers what its needs were, and the insurers would provide what they calculated to be the best solutions,” said Kossovsky…“Social dynamics and risks now have an enterprise-level impact. Expertise to manage and quantify these risks now resides outside the insureds, requiring the type of consultative relationship that existed in the days of the Hartford Steam Boiler Inspection and Insurance Company.”Risk & Insurance
April 18, 2019
“Reputation risk…requires the type of consultative relationship that existed in the days of the Hartford Steam Boiler Inspection and Insurance Company.”
Reputation insurance publicly validates a company’s governance processes lessening the expected economic losses from a crisis.
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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