“Consider these recent board exposures: A leading beverage company is required by the SEC to include a proposal in its proxy materials that the board commission a report assessing the risks to the company’s reputation associated with changing scientific understanding of the role of sugar in causing disease. Or a proxy proposal at another beverage company would require the board to consider the effects of its products on obesity and cites it as, among other things, a material reputational risk that the board has failed to address.”
Food Dive
May 20, 2019
“Stakeholders, whether they be customers, suppliers, employees, investors or government regulators, have expectations about corporate governance, safety and reliability, business operations and financial performance.”
Reputation risk: peril of stakeholders’ disappointment and anger.
For a broader view of reputation risk, discover additional articles by Steel City Re here, mentions of Steel City Re here, and comments on newsworthy topics by Steel City Re here. To read an abstracted summary of reputation risk, see below
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?