Personal Cost

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.

September 10, 2024

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At the end of reputation risks’ long tail are board-level consequences, exemplified by the denouement of this infamous winter 2022 crisis precipitated by software quality issues, unaddressed. “Southwest Airlines on Tuesday announced an overhaul of its board of directors, including the planned departure of its executive chairman, Gary Kelly, after a meeting with a hedge fund that has called for sweeping changes at the company.” The takeaway: reputation risk management is always a vital governance issue.

At the end of reputation risks’ long tail are board-level consequences, exemplified by the denouement of this infamous winter 2022 crisis precipitated by software quality issues, unaddressed. “Southwest Airlines on Tuesday announced an overhaul of its board of directors, including the planned departure of its executive chairman, Gary Kelly, after a meeting with a hedge fund that has called for sweeping changes at the company.” The takeaway: reputation risk management is always a vital governance issue.

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).

May 31, 2024

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Corporate swatting--calling the DoJ when there is no known issue just to see if something shakes looses--is no longer unthinkable.

Manifestations of complex interconnected risks generally culminate in reputational crises, but they can be managed. Relying only on reporting systems when insiders may become aware of such risks…is not risk management. Reporting systems are unlikely to mitigate federal investigations and follow-on issues because today the risk/reward balance favors whistleblowing over internal reporting. In fact, the rewards of whistleblowing are so great right now that corporate swatting–calling the DoJ or SEC with a hot tip when there is no known issue just to see if something shakes looses–is no longer unthinkable.

May 18, 2024

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Boeing Proxy Advisers Split Boeing Proxy Advisers Split. Directors’ personal reputational value depends on how well they meet stakeholders’ expectations for contributing to institutional reputation resilience by dutifully overseeing thoughtful risk management over everything that is mission critical. Naturally, that personal reputation value sinks when influential third party proxy advisers imply that directors’ further contributions …

May 18, 2024 Read More

March 5, 2024

Managing corporate reputation is a lot like mixing a cocktail: attention to mission-critical details. Reputation risk management is strategic.

Managing corporate reputation is a lot like mixing a cocktail: attention to mission-critical details. Reputation risk management is strategic.

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