In our social media-driven society that seems intent on personifying blame for corporate missteps, the anger, disappointment and loss of trust in reputation crises places directors and officers in the cross hairs.
D&O liability coverage is insufficient to protect Directors and Officers against personal reputational damage caused in the court of public opinion – and costing them potentially millions of dollars in future lost income. Steel City Re has solutions for dutiful directors and officers.
“Stakeholder Expectations: Investors, regulators, and legislators keep raising the bar for boards on the oversight of everything…”
Advisory Business Purpose
Reputation is a product of social, political and economic factors. Reputation is a vital asset of a firm, which boards have a duty to protect. Reputation risk management and financing, when deployed enterprise wide under the oversight of a robust reputation risk governance program, can help reduce a board’s exposure to shareholder derivative suit liability and to damage in the court of public opinion.
The intersection of business; social, political and cultural; and regulatory expectations of companies and their leadership—reputational risks—comes at the same time that an evolution has been taking place in the fiduciary duty standards for public company boards.
To enable a client’s board to better meet its duties of care and information, the deliverable comprises an actionable report of reputation governance discrepancies for senior management to rectify and integrate with the existing enterprise risk management apparatus, policies and procedures.
In addition, at the conclusion of the program, the client’s board members should:
- Understand thoroughly the meaning of reputation, reputation risk, reputation crisis, reputation risk management, and reputation insurance.
- Appreciate the integration of social, political and cultural; and regulatory expectations.
- Understand how the board sets expectations among stakeholders through the actions and artifacts of governance.
- Understand the apparatus, policies and procedures used by the company’s operational leadership to manage reputation risk.
- Be secure in the use of oversight processes and be able to explain its benefits and limitations with respect to reputation risk.
If a board’s oversight of a company comes under attack and the resulting reputational damage forces a director to resign, lost may be an annual compensation of about $250,000 a year for each corporate board they serve on, and most serve on multiple boards. It usually does not end there.
“Corporate names are resilient: when their images get damaged, a change of management or strategy will often revive their fortunes. But personal reputations are fragile: mess with them and it can be fatal.”
Reputational damage can turn a director into a professional pariah.
If he or she becomes less desirable to the other corporate boards, that usually means millions of dollars in losses over the course of a career.
Steel City Re offers products that are a supplement to traditional D&O coverage and that protect individual corporate leadership against these types of career-altering events.
What’s your strategy?
Reputational risk is a concern for every company, organization or individual in corporate leadership. Let us help develop your strategy for reputational resilience.