What’s Your Reputation Worth?
Have you ever realized how quickly information can spread? I would venture to guess if you’ve visited the store, gone out to eat, or even walked around your office building, you’ve likely seen at least one person (probably many) on their phone. And gone are the days people use their phones for texting or calling solely. Now, social media is on nearly everyone’s device. While on the outside, it’s a great way for people to stay connected…there’s a pretty big danger lurking. It’s called reputational risk. If you’re not sure what I’m talking about…let me just say the name Rosanne Barr. Are you picking up where I’m going? One Twitter post by Barr upended an entire show. United Airlines has also suffered a reputational hit related to several blunders in dealing with cargo and passengers, and it was all captured on social media. Those are just two of many examples I could provide.
So, let me ask you this — what’s your company’s reputation worth? I’m pretty sure I know the answer, but let me throw a stat to that. A recent article in Bloomberg cited that up to 75 percent of a company’s value is tied up in its reputation. And according to a Deloitte & Forbes Insights survey of 300 executives, reputation is considered the highest impact risk area to business strategy.
To get a bit technical, reputation is an expectation of behavior. A reputational crisis occurs when stakeholders change their expectations and behaviors. Adverse publicity from a disgruntled employee, customer, etc. only creates a reputational crisis if the company isn’t consistent in its behavior and expectations are changed…or they don’t live up to the expectations. BP is one example of this. The oil company billed themselves as a caring company with concern for the environment. However, a major explosion and oil spill created a gap between the perception they created with media of a caring company and their actual behaviors.
No company wants to be on the receiving end of an issue that diminishes their reputation. But, the speed at which information can now travel means no one is 100 percent immune. So, what should you do? I’d suggest looking into how you can protect your company’s livelihood should a reputational crisis happen.
Holmes Murphy represents several insurance carriers offering insurance products for reputational risk. Similar to cyber liability, reputational risk is an emerging product with no standard forms or pricing available at this time. The greatest benefit of these policies — similar to cyber liability — is the access to resources in the event of a crisis, such as media firms/crisis management firms to help assess the impact and strategize to minimize or eliminate the impact. Reputational risk can also potentially be funded using other alternative risk platforms, such as Captive solutions, which Holmes Murphy has deep expertise in.
If you’re interested in talking with us about the programs or just simply have a question about reputational risk and what you can be doing to protect your company, don’t hesitate to reach out. It’s better to be prepared then be left wondering how to put the pieces of a messy crisis back together. Your reputation is worth it.
Published on: 06.14.18