Our member Airmic has released a step-by-step guide to managing reputational risk and laid the foundations for increased insurance cover for losses incurred as a result of reputational damage.
The report, produced in partnership with Reputation Institute and launched at the conference in Liverpool, sets out a structured approach to understanding and mitigating risk. It argues that reputation is an intangible risk grounded in emotion, but that by breaking down your reputation into measurable components, you can “make the intangible tangible”.
The report provides a framework for businesses to consider the extent to which an event could reduce people’s trust in seven core areas of business: products/services, innovation, workplace, governance, citizenship, leadership and financial performance.
Reputational risk has consistently come at or near the top of concerns for both risk managers and chief executives, yet only 3% of risk managers buy insurance cover and just one third say they have “high confidence” in their company’s management of the risk, according to a survey of Airmic members conducted this year.
John Hurrell, chief executive of Airmic, commented: “A company’s reputation is in many ways the most important risk to tackle because it underpins a company’s entire business model – and thereby its licence to operate. At the moment there is not enough understanding of the risk among businesses, risk managers or insurers. Our report aims to remedy this. It represents both a challenge and opportunity for the insurance market.”