February 27, 2023
Southwest Airlines Reputation Crisis Day 60. Equity returns at 60 days normalized to the S&P500 returns are -10.2% (predicted -3.8%). The implied loss to shareholders is $4bn.
Cost of Reputation Loss
February 20, 2023
Mission critical risk denial can be costly. A holiday flight cancellation fiasco by Southwest Airlines crushed the company’s market capitalization and caused the company to take an $800 million dollar write-down for Q4 and record losses three times greater than analysts had expected. Equity returns 42 days into the crisis show Southwest trailing the Dow Jones U.S. Airlines Index by 18.4%. Had it merely kept pace with that index, Southwest’s market cap would have been more than $3.3 billion higher.
January 30, 2023
Southwest Airlines Reputation Crisis Day 35. Equity returns at 35 days normalized to the S&P500 returns are -6.2% (predicted -5.7%). It is under performing the Dow Jones US Airlines Index (DJUSAR) by 15.4%. The regression technology powering the equity impact model was derived from a study by Steel City Re, an ESG and reputation insurer.
January 28, 2023
Liquidity Issues at Blackstone. [There are now] questions about whether the people actually knew the risks, from higher fees than stock and bond funds to the illiquidity of the assets, and even the incentives advisers might get to push certain products. “Blackstone has to prevent a catastrophic shift in stakeholder expectations,” says Kossovsky.
January 11, 2023
Delayed maintenance creates reputation risk. In the aftermath of a meltdown that led to 16,700 flight cancellations and may cost the airline more than $800 million, blame has fallen on an outmoded crew scheduling system and an unusual point-to-point route network. […] Southwest has acknowledged putting updates to its crew scheduling system behind other improvements, despite long-standing complaints from pilots and flight attendants.
December 13, 2022
The velocity of reputational risk is approaching the speed of a nuclear assault on a nation, said Nir Kossovsky, Steel City Re CEO. A “Military grade” response to sped up reputational crises requires cold war game theory strategy and preemption.
November 29, 2022
Mitigating an expectation shift: An effective, thoughtful risk strategy. Of the many on offer, only our solution is quantitative, battle-tested, quality management-proven, and grounded in four Nobel Prize winning insights. The bottom line: mitigating costly reputation risk by targeting factors that would lead to a shift in expectations
October 16, 2022
Reputation resilience vs. reputation loss. (V)oters have a record of dumping UK governments that lose their reputation for economic competence, even at elections some years later. Truss faces a monumental struggle to convince her own MPs she is capable of rehabilitating her own and her party’s image, and of leading Britain forward. If they conclude she cannot — and some seem already to have made up their minds — they may move against her quickly.
