October 4, 2022

Pay by ESG Performance Metrics

While environmental, social and corporate governance (ESG)-linked pay and bonuses are increasingly popular in big businesses, the concept found a lack of support among two recent visitors to Intelligent Insurer’s hub for debate and discussion: Nir Kossovsky, head of Steel City Re, an insurance intermediary and risk advisor for reputation and ESG linked reputation risk; and GCY Associates’ founder Gerald Chen-Young, who specialises in institutional investment management, consulting and advice, and has worked with several boards on ESG issues.

Click on the image above to read more (Intelligent Insurer Paywall).

Steel City Re is an insurance intermediary and risk advisor for reputation and ESG-linked reputation risk. Auditors’ reports on controls are how boards can signal to regulators that their management processes are effective. Reputation and ESG insurances are how boards can signal to investors and the courts (and regulators) that their governance processes are effective.

Reputation is Mission-Critical

Pay by ESG Performance Metrics: A management program for ethics and compliance can forestall prosecution and mitigate fines. Similarly, oversight of “mission- critical” issues can forestall securities litigation. A program for reputation resilience, comprising both risk management and authenticated oversight for all that is mission-critical, can create value in many ways.. To this end, Steel City Re offers a Reputation Resilience Program.

Having a robust Reputation Resilience Program in place offers, amongst other benefits:

• Protection for the company, its staff, executives, and board from litigation and regulatory challenges
• Improved governance processes and better enterprise risk management protocols
• Establishment of an agile operating, communications, and decision-making team, with clear roles and responsibilities, trained and ready to handle all reputational threats
• Proactive management of risks that could give rise to delays or derailing concerns around new product and strategic partnership launches
• Captured behavioral economic value from stakeholders
• Reduced costs of debt and risk transfer while boosting equity value

A hazard of reputation risk is a lurking gap between stakeholder expectations and reality. Another hazard is the emotional intensity associated with expectations. The peril is anger from disappointed stakeholders. This video and this written summary explain the behavioral economic features of the many perils of reputation risk.

Mitigating risk strategically through expectation management and operational adjustments evinces thoughtful management and dutiful governance. Financing such risks evinces prudence, and doing so publicly enables stakeholders to appreciate and value the effort. These comprise the core of Steel City Re’s professional services.

One Question

Pay by ESG Performance Metrics: ESG-linked reputation risks are prevalent and material. Are insurances for ESG-linked reputation risk part of your strategy?