How insurance promotes social responsibility
In San Jose, Calif….on Jan. 1, the city will begin requiring gun owners to carry liability insurance to compensate victims harmed by the negligent or reckless use of a firearm. The policy was first announced earlier this year. The rationale? The behavioral economic properties of insurance have long successfully nudged social change.
Click on the image above to read more (New York Times Paywall).
We expect that the insurance industry will become increasingly invested in reducing gun-related harm.
New York Times: December 22, 2022
Steel City Re is an insurance intermediary and risk advisor for reputation value and ESG-linked reputation risk. We offer solutions for measuring reputational risk and reputational value, governance strategies for overseeing reputation risk management frameworks, insurance, and reinsurance. Reputation and ESG insurance and reinsurance are strategic instruments boards use to signal to investors, bond raters, and the courts (and regulators) that their governance processes are effective.
Reputation is Mission-Critical
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 insurance (reinsurance)-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; i.e., measuring reputational risk
- Establishment of an agile operating, communications, and decision-making team, with clear roles and responsibilities, trained and ready to handle all reputational threats; i.e., a reputation risk management framework
- 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; i.e., value of reputation
- Reduced costs of debt and risk transfer while boosting equity value; i.e., boosting reputational 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.
Insurance promotes social responsibility. 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
Insurance promotes social responsibility. ESG-linked reputation risks are prevalent and material. Are reinsurance and insurance for ESG-linked reputation risk part of your strategy?