Reputation in a time of crisis

As businesses move forward from the impact of the global COVID-19 pandemic, so their reputations will be under close scrutiny from stakeholders across the board.

• How well are they looking after their employees?
• What steps are they taking to support customers?
• Are they working collaboratively with suppliers?
• Will they seize the opportunity to reinvent, reinvigorate, even innovate in these difficult times?

Such questions are particularly important when the valuation of so many of the world’s largest public companies is based on intangibles.

Even the most cursory glance at the top 20 companies by market capitalisation shows that the majority of the big players - companies like Facebook, Alphabet, Amazon and Ali Baba - are distributors of products, and/or creators of intellectual property.

But traditional businesses are equally at risk from reputational damage.

Reputation at risk

Take, for example, the hypothetical case of an accident at an outdoor theme park in the UK. A visitor on one of the park’s rides falls through the safety-netting and is left with life-changing injuries.  The incident is witnessed by other visitors at the theme park.

Although emergency services are called and the park is swiftly closed to visitors, within the hour, videos of the event and its immediate aftermath are trending on social media platforms. Negative comments are being made about safety and response times even while the Emergency Services are still in attendance.

While traditional media such as a national newspaper might have taken 4-8 hours to get this story to the public, social media does the job in an instant, often with little or no fact checking. And, of course, rumour and/or falsehoods can be just as damaging as the truth and travel even faster.

Truth is a slippery concept

In this era of false or misleading news and ‘always-on’ social media, truth is a slippery concept. Perception is everything and trust is in short supply.

It’s no longer governments, boardrooms, or news editors that hold the balance of power in influencing public perception. That power now lies with individuals and influencers – the myriad of bloggers, vloggers, tweeters and podcasters.

So what’s the solution?

How can businesses get on the front foot and protect their reputation, and their valuation, in this complex and challenging environment?

Liberty Specialty Markets has invested in an exclusive partnership with Willis Towers Watson and Polecat Intelligence, an artificial intelligence (AI) specialist that monitors real-time data and provides advanced analytics on reputation performance to offer reputational crisis insurance. The solution helps businesses to anticipate, manage and quantify insurable perils and broader reputation and environmental, social and corporate governance (ESG) priorities.

Managing this data enables Boards, C-suite and Risk Managers to put hard metrics around previously intangible assets to benchmark and quantify risks, make better informed decisions and measure the impact of issues and crises on corporate reputation.

Peace of mind at last?

As stakeholders expect more of businesses and regulatory oversight increases, so reputations will come increasingly under threat. Insurance, like every other industry, needs to adapt and rise to the challenge.

Our intention is that our reputational crisis insurance will help businesses get back on the front foot in three ways:

1. by enabling real time crisis management
2. by covering the cost of crisis communications
3. and perhaps most importantly, by providing cover for the loss of gross profit following a crisis event.