Safeguarding brand and reputation

16 September 2016

As the value of a brand rises so does its vulnerability. Reputations can be lost overnight. And the growth of social media and 24-hour news makes life significantly harder for directors concerned about the reputation of their company and its products.

Problems can escalate much more quickly today because the public are more reactive and more attuned to issues such as the environment and fair working conditions. And because there is more consumer choice, companies with reputational issues quickly feel the impact on their sales.

Responsibility for protection of brand reputation, of course, rests fairly and squarely on the shoulders of the corporate board. That applies to strategy as well as mitigation through insurance. For instance, in the food and agriculture sector, a well-managed product recall, with good PR, can prevent longer lasting damage. A brand’s reputation might even be enhanced by a prompt reaction.

It is also vital to be up to speed with the topical issues: salt and sugar, for instance, are currently getting a lot of media attention. At the primary production level, concerns about the environmental impact of farming, pesticides and animal welfare are all hitting the headlines.

In the communications, technology and media sector, the range of events likely to damage corporate reputation include data loss and network interruptions through to controversy over ethics and tax.

Airmic’s recent ‘Roads to Resilience’ study highlights five key principles. Perhaps the most important of these is what the study calls risk radar or the ability to anticipate problems and develop an early warning system.


Reputational risk identification starts with accurate measuring to identify the risk areas. Following that the study advises setting up workshops with key internal stakeholders to assess your capability to tackle threats. The company can then set a specific action plan for each risk, making individual decisions based on resources and investment.

It’s also important to identify who is responsible for responding to each risk and for communicating any changes across the organisation. And finally, the performance of the programme must be monitored to ensure risks are being mitigated effectively.

The role played by insurance will depend on how management views reputational risk. Mitigating the risk is complicated by the fact that only a relatively limited number of insurers have the flexibility and capacity to do it well. The trick is to design a package that closely fits your identified risks. Because the risk is multi-faceted, it may be possible to transfer separate aspects of it across different insurance products, including cyber, property damage, business interruption, errors and omissions and so on.

Product contamination insurance is proving particularly effective in supporting companies to manage a recall event although it is important to examine the triggers that activate the policy. For instance, reputational issues, such as the presence of horse meat in a burger, which would not cause harm to the consumer, would not typically trigger a contamination policy.

Consequently, broadening cover is a big priority for insurers. It involves asking clients about their reputational concerns and trying to find bespoke wordings to address them. The key to development in this area is integration into existing risk management arrangements.

Loss of revenue is proving to be the most suitable metric for measuring reputational damage because it directly reflects how many customers turn away from the brand. But action to measure loss of revenue – whether by employing forensic accountants or surveying customers – must be taken within weeks rather than months. Liquidity suffers when a crisis occurs and quick money is needed. So it is vital for the evidence to be provided quickly to trigger the essential claim. Again working closely with insurers can resolve most of the pitfalls.

For further information, please contact Edel Ryan, Head of Media and Entertainment, on +44 20 7528 4745 or email