The issue at Campbell’s is neither one of compliance nor enterprise risk management, but rather one of reputation risk governance. The question is therefore how did reputation resilience become so impaired that that one-year old stupid comment by an allegedly impaired senior executive, then into his 5th month of employment, exposed weak governance, reputation risk management, and reputation crisis management?
To recruit and retain robust diverse boards, companies need the protection of Steel City Re’s Side R® D&O parametric reputation insurance.
Good governance does not shield directors from liability risk nor reputation risk. The former is the hard lesson learned by everyone in the mid 1980’s; the latter is being learned now. The reputations of board members have increasingly become targets in a time of heightened activism and social media activity. Read the article in Directors & Boards to learn what experts say directors should do.
Personal attacks on directors are now a governance weapon – amplified by activists, media, and social platforms. Traditional protections (proxy advisors, board slates, collegiality) are eroding. Reputational harm can drive board turnover, litigation, and long-term career damage. Emerging responses: (1) Hazard pay for directors; (2) Reputation insurance alongside D&O coverage. Oversight of reputational risk is mission-critical. Boards must exercise foresight: how is reputational risk being integrated into risk management, who is responsible, and how is the company mitigating it?
“In practical terms, reputation risk reflects the misalignment between what a company does and says, what various stakeholders expect and how they respond in financially relevant ways. The choices and response of those stakeholders — buying, investing, advocating, protesting, regulating, criticizing or leaving — carry consequences for a business and its operating environment, and sometimes entire industries. These are the under appreciated and tangible costs of reputation risks worth considering with more ongoing foresight”…and financial solutions like reputation insurance and board-level Side R protections.
Facebook recognized the reputational risk associated with its users’ privacy, and the shareholders homed in on this in their lawsuit. […] “Facebook is in the business of collecting user data, and if its reputation is damaged such that users lose their trust, it has the potential to damage the company’s and its investors’ long-term interest beyond the fines and penalties already paid” […] Mission-critical risks have become intertwined with boards’ fiduciary duties … reputation can be a mission-critical risk for many companies, according to Nir Kossovsky, CEO of Steel City Re, an insurance provider for reputational risk.
Disappointed stakeholders—the product of missed expectations and a feature of reputation damage—are a force to be reckoned with. Adidas chair in re-election fight as investors plot revolt. DWS, the asset management arm of Deutsche Bank, told the Financial Times that it would vote against Rabe’s re-election as chair of the German sportswear company’s advisory board at the annual meeting on Thursday because of a “repeated breach of expectations”.
PR nightmares mount for Pirates, who can’t win — on or off the field. […] Chatter about the team on social media might be loud, but that does not necessarily make it a concern, according to Nir Kossovsky, CEO of Steel City Re, a Pittsburgh-based reputation risk management and insurance firm. […] When a team’s reputation takes a grave hit, Mr. Kossovsky said, relationships with all stakeholders are at risk. The city or state could roll back any tax benefits or waivers they offer the franchise. The Pittsburgh Sports and Exhibition Authority, which collects $100,000 in base rent from the Pirates for PNC Park each year, could raise that rent or amend the lease. Vendors could pull out of contracts. Loans could become more expensive.
86% of the Global Risk Advisory Council believe reputational risks will increase over the next quarter. The Global Risk Advisory Councilncounts more than 100 members, including the likes of former CIA Director Leon Panetta and MI6 Chief Sir Richard Dearlove as well as former heads of state and CEOs.
As SEC sees it, we live in a Manichean world where allies are pliant, and anyone who is anything else, is an activist. No more engagement to offer a gentle nudge. “Investors that threaten to vote against directors’ reelection if the company is not aligned with their stewardship policies or views on environmental, social or governance issues will not be considered passive and must instead file a Schedule 13D as activists, according to a new compliance and disclosure interpretation released by the SEC’s Division of Corporation Finance this week.