D&Os

December 4, 2024

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Governance experts including the National Association of Corporate Directors and other authorities are encouraging boards to support management more closely in an "uncertain — and possibly volatile — environment," even at the risk of appearing to micromanage. But with engagement comes culpability for the reactions of already-angry stakeholders. Simply put, the costs of leaning into a reputation crisis may include the dispensation of board members whose personal losses will not be covered by D&O liability insurance. Board members need personal reputation insurance.

Governance experts including the National Association of Corporate Directors and other authorities are encouraging boards to support management more closely in an “uncertain — and possibly volatile — environment,” even at the risk of appearing to micromanage. But with engagement comes culpability for the reactions of already-angry stakeholders. Simply put, the costs of leaning into a reputation crisis may include the dispensation of board members whose personal losses will not be covered by D&O liability insurance. Board members need personal reputation insurance.

October 28, 2024

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An industry that is using parametric technology to insure losses from natural disasters caused by wrathful deities can now also provide meaningful insurance for losses from reputation disasters caused by emotional mortals. The 4-M parametric framework of metric, model, monitor and market for natural earthquakes disclosed at the 2023 Hawaii Captives Insurance Conference makes parametric insurance for metaphorical earthquakes easy to back, underwrite, broker and bind.

An industry that is using parametric technology to insure losses from natural disasters caused by wrathful deities can now also provide meaningful insurance for losses from reputation disasters caused by emotional mortals. The 4-M parametric framework of metric, model, monitor and market for natural earthquakes disclosed at the 2023 Hawaii Captives Insurance Conference makes parametric insurance for metaphorical earthquakes easy to back, underwrite, broker and bind.

October 11, 2024

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DOJ Hold Boards Accountable Risk Management. New enforcement plans outline expectations for data oversight, compliance expand the potential for reputation risk.

DOJ has updated its expectations expanding the potential for reputation risk. Under the new guidelines, prosecutors will consider whether companies have a process for identifying and managing emerging internal and external risks related to the use of new technologies, such as AI, and whether they are integrated into broader enterprise risk management practices.

September 14, 2024

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Boeing employees are striking for…more input into product safety. This labor action is a manifestation of lost reputation value. This labor action is a stark reminder that angry, disappointed employees are one of many expressions of a reputation crisis. Corporate leadership and governors must be mindful that that the long tail of reputation risk typically includes costly investor, regulator, and yes, employee actions.

Boeing employees are striking for…more input into product safety. This labor action is a manifestation of lost reputation value. This labor action is a stark reminder that angry, disappointed employees are one of many expressions of a reputation crisis. Corporate leadership and governors must be mindful that that the long tail of reputation risk typically includes costly investor, regulator, and yes, employee actions.

September 12, 2024

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Reputation Risk Hinted by Nickname Nurse Death

Reputation risk arises from the failure to meet expectations. All too frequently, reputation risks arising from material operational problems known to insiders are dismissed by those in charge or authority. Nicknames can indicate an issue with ethics, innovation, safety, security, sustainability, and quality. “Junior doctors were referring to Lucy Letby as “Nurse Death” … two years before she was arrested. […] Letby, 34, was sentenced to 15 whole-life orders after she was convicted across two trials of murdering seven babies and attempting to murder seven others.” Board members should note that there are many windows into human resource-based organizational risk.

September 9, 2024

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Affirming in practice what it disclosed in January, Blackrock "engaged 2,683 times on strategy, purpose and financial resilience-related themes with 2,014 companies — more than any of its other engagement priorities — this proxy year. Given this information, board directors may want to prioritize financial resilience in their own work and in engagement with index funds." Steel City Re can provide metrics and tools to support innovative strategies for strengthening financial resilience.

Affirming in practice what it disclosed in January, Blackrock “engaged 2,683 times on strategy, purpose and financial resilience-related themes with 2,014 companies — more than any of its other engagement priorities — this proxy year. Given this information, board directors may want to prioritize financial resilience in their own work and in engagement with index funds.” Steel City Re can provide metrics and tools to support innovative strategies for strengthening financial resilience.

August 19, 2024

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Investors are not good at predicting the net impact of reputation risk. They tend to over or underestimate the net impact on future cash flows on the basis of sentiment and noise rather than on indicators of stakeholder disaffection and behavioral change such as those integral to Steel City Re's premier reputation risk prediction tool, its Resilience Monitor.

Investors are not good at predicting the net impact of reputation risk. They tend to over or underestimate the net impact on future cash flows on the basis of sentiment and noise rather than on indicators of stakeholder disaffection and behavioral change such as those integral to Steel City Re’s premier reputation risk prediction tool, its Resilience Monitor.

August 8, 2024

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Quantas ex-CEO Forfeits Bonus for Reputation Damage

Qantas Airways Ltd. docked A$9.3 million ($6.1 million) from former Chief Executive Officer Alan Joyce’s final payout and announced a governance overhaul after a review partly blamed board and management errors for the carrier’s reputational crisis. This punitive action conforms to heightened expectations this year by both institutional investors and proxy advisers that companies should be clawing back CEO compensation for both reputational damage and for failures in risk management, even if financials do not have to be restated. This should help focus board attention to the factors that increase, protect, and restore reputation value including reputation risk intelligence, risk management, and reputation value insurance (aka, Side R).

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