Insurer Steel City Re publishes reputational risk resilience checklist
Steel City Re has published a checklist for firms looking to bolster their reputational resilience as social media, smartphones and other technology, and the rise of cyber crime has made them more vulnerable to this kind of threat.
The company, which is backed by Tokio Marine Kiln, provides advisory services and reputation insurances.
Nir Kossovsky, Steel City Re CEO, explained that the checklist was needed now more than ever as “a record number” of CEOs lost their jobs last year, coupled with a “surge” in the number of reputation-based lawsuits focusing on board-level oversight.
“Ninety percent of the S&P 500 refer to reputation in their SEC filings as a material risk – but most never describe their strategy for mitigating it,” Kossovsky added.
Kossovsky said that most corporate leaders do not fully appreciate that reputation risk is actually the peril of angry disappointed stakeholders, rather than a marketing problem.
“When boards disclose reputation as a material risk without truly understanding it or appropriately mitigating it as a governance and operational problem, they are putting themselves and their companies in even greater peril.”
The reputational resilience checklist has been published in the company's latest white paper.
The checklist urges company leaders to take the list as a set of milestones to be achieved as part of a jounrey to protecting their business.
Checklist
- The board of directors needs to understand the true nature of reputational risk. For example, the economic damage and potential losses that could result from the behaviors of angry and disappointed stakeholders, as opposed to merely negative media coverage.
- A board committee should oversee the corporation’s enterprise-wide policies, practices and procedures that mitigate and manage reputational risk.
- Senior management works to set appropriate stakeholder expectations by bridging risk management and marketing silos. This ensures aspirational messaging won’t outpace actual performance.
- The company treasury needs to understand the peril is to cash flows rather than balance sheet. It also needs to be prepared to fund reputation losses with insurance captives or risk transfer solutions.
- Risk management teams and frameworks need to continually assesses stakeholder expectations, taking into consideration fast changing cultural and political events. These teams need to have a clear understanding of the full spectrum of operational and financial strategic options to manage and mitigate potential losses from those perils.
- The company needs to deploy preemptive, simple, easy to understand expressive risk management strategies such as warranties and insurances to inform and substantiate the marketing department’s messaging. Communications activities support risk management with signals of governance integrity.
- Key stakeholders need to appreciate and value the company’s enterprise-wide mitigation and governance efforts.
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