“Airbus is on track to overtake the US aircraft maker as the world’s biggest plane maker thanks to the grounding of the Boeing 737 Max aircraft after two separate crashes involving the plane. There were many factors behind the disaster, but an important one seems to be risk-taking at Boeing in order to maximise profit. The plane maker has been criticised for outsourcing work to engineers who were paid just $9 an hour, charging extra for certain safety features, and rushing the aircraft to market sooner than might have been wise in order to try to nab business that might otherwise have gone to Airbus.”Financial Times
July 15, 2019
“(Leadership) should think hard before they look to financial engineering…(t)he costs — real, reputation, and moral — aren’t worth it.”
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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?