Risk Focus: Reputation

Gear Up for Social Media Battles

Evolving technologies and strategies help companies guard against the ravages of social media attacks. 
By: | February 20, 2018 • 6 min read

In this increasingly technologically advanced world, it seems that no one is immune from the reaches of social media.

With nearly 2.5 billion social media users worldwide, it’s more likely than ever that a company could see its hard-earned reputation shattered overnight.

Worse still, a recent Grant Thornton survey found that companies are massively exposed, with 59 percent of respondents saying they don’t carry out any form of social media risk assessment.


Because of the unpredictability and speed at which reputational damage can spread on social media, risk managers and companies need to be proactive and have a plan in place should the worst happen. But in doing so, they need to first consider all risk mitigation and transfer options available, including artificial intelligence (AI) and algorithms.

Dealt with properly, an incident can be turned around and potentially even enhance a company’s reputation. But handled badly, it can result in millions of dollars in lost sales and severely damage a company’s share value.

“The danger of not having a plan to manage reputational risk on social media is that if something negative is posted about your organization, before you know it, it has gone viral, causing untold damage to you and your brand,” said Elizabeth Carmichael, president of Carmichael Associates.

Reputational Risk Dangers

Reputational risk on social media has undoubtedly been heightened by the rise of fake news, making it increasingly difficult to distinguish between fact and fiction, said Steel City Re’s CEO Nir Kossovsky. It has been exacerbated by a growing sense of anger and frustration among large swaths of the population, he said.

“There’s sometimes a temptation to be dismissive of an initial social media attack, especially if you consider it unjustified or the source is not credible,” he said.

“But that is no longer acceptable given the blurring of lines between real and fake news and the speed at which fake news can travel.”

Anthony de Fazekas, head of technology and innovation, Canada, Norton Rose Fulbright, Toronto, Canada

Failure to tackle the problem can often worsen the situation, said Anthony de Fazekas, head of technology and innovation, Canada, with Norton Rose Fulbright. That is because inaction can be seen as an admission of guilt, he said.

“This can impact your claim as well,” he said.

“In the courtroom, if a party takes no action for what is considered a ‘long time’ in social media time, despite having knowledge of a defamatory statement, the defendant can hold up their inaction to suggest that, if the statement was untrue, more should have been done.”

The result can be millions of dollars in lost revenue and customers, and ultimately a tarnished reputation, said Chandra Seymour, senior vice president with Marsh Risk Consulting’s strategic risk consulting practice. The only sure way of addressing that, she said, is to get out in front of the problem.

“Tackling the issue proactively is the only way to ensure it doesn’t get out of hand,” she said.

“Reputation typically accounts for 30 percent of a company’s stock price and getting it back can be much harder than had you taken proactive steps to protect it in the first place.”

Randy Nornes, executive vice president at Aon, said that the first step a company should take is to identify risks that might lead to dissatisfaction among stakeholders. The company should then create a plan for how to tackle the problem should it arise and regularly monitor social media for commentary about the company, he said.

“What most organizations struggle with is identifying someone to be responsible for monitoring and managing that particular risk,” he said.


“Then they need to determine what the escalation process is if something does happen,” he added.

Chuck Saia, CEO, risk and financial advisory for Deloitte, said that leveraging advanced analytics can help companies weed out negative social media. Simulating a hypothetical ‘what if?’ scenario also can help detect reputational threats, he said.

“As a best practice, these ‘wargames’ should be conducted at least twice a year, not as a pro forma exercise, but as strategic opportunities to improve the organization’s overall reputation and resiliency.” — Chuck Saia, CEO, Deloitte Risk and Financial Advisory

“Typically viewed as a cyber risk management exercise, these simulations should extend to address all potential threats on reputation, brand and value,” he said.

“As a best practice, these ‘wargames’ should be conducted at least twice a year, not as a pro forma exercise, but as strategic opportunities to improve the organization’s overall reputation and resiliency.”

Artificial Intelligence

A recent Deloitte survey found more than half of companies plan to address reputational risk by investing in technology such as analytical and brand monitoring tools. Boards also are beefing up their in-house PR and social media monitoring capabilities, it said.

One possible solution is Artificial Intelligence (AI), said William Atak, reputation expert at SafeOnNet. Atak said AI can be used to detect potential and upcoming crises, as well those that happen suddenly. This may include the use of robots to promote positive stories online, at the same time suppressing unwanted or negative news, he said.

“You can use AI to monitor and warn companies alike — in that way, you can prepare yourself when other companies are in or about to enter a crisis situation,” he said.

Chuck Saia, CEO, Deloitte Risk and Financial Advisory

“In the future, you will get more advanced tools to handle these kinds of situations, as the robots get better at detecting positive or negative outcomes.”

Marcus Smith, vice president for reputational risk at Polecat, said that algorithms can be employed to identify and track emerging reputational risk in real time.

Companies can then use that data to tailor their risk management strategies accordingly, whether related to the workplace, employee safety, company share price or upcoming financial results, he said.

“The most prominent example of this was with Uber when a social media campaign was started, urging users to boycott the service after the CEO was accused of sexual harassment in the workplace,” he said.

“But thanks to the use of AI, stakeholders were able to get a sense for how deep public dissatisfaction was going to be, which ultimately led to the CEO’s departure.”

Furthermore, said Dan Zitting, chief product officer at ACL, AI can be used to identify and classify certain sentiments into categories of severity. As the algorithms and models become smarter, they can classify larger volumes of data faster, he added.

“By using natural language processing and machine learning to look at a body of text, posts or Tweets, you can quickly identify certain sentiments and categorize them in terms of potential maliciousness or events,” he said.

“Monitored over time, you can then see where spikes start to emerge and gear your program toward dealing with those.”

Holistic Approach

While AI is undoubtedly a key tool in any risk manager’s armory, companies need to take into account all forms of risk transfer and mitigation when dealing with reputational risk, said Kossovsky.


“Companies need to be prepared in advance with strategies for pre-empting and responding immediately and forcefully when social media is weaponized against them,” he said.

“They need to adopt an integrated approach that includes risk mitigation, financing and transfer that tell a compelling story to stakeholders and indemnifies any potential targets within the organization.”

Seymour added: “A lot of firms are still trying to get to grips with social media risks. For many, the biggest challenge is just the sheer volume of data and how to handle it in an appropriate manner.” &

Alex Wright is a U.K.-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at riskletters@lrp.com.

More from Risk & Insurance

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Kiss Your Annual Renewal Goodbye; On-Demand Insurance Challenges the Traditional Policy

Gig workers' unique insurance needs drive delivery of on-demand coverage.
By: | September 14, 2018 • 6 min read

The gig economy is growing. Nearly six million Americans, or 3.8 percent of the U.S. workforce, now have “contingent” work arrangements, with a further 10.6 million in categories such as independent contractors, on-call workers or temporary help agency staff and for-contract firms, often with well-known names such as Uber, Lyft and Airbnb.

Scott Walchek, founding chairman and CEO, Trōv

The number of Americans owning a drone is also increasing — one recent survey suggested as much as one in 12 of the population — sparking vigorous debate on how regulation should apply to where and when the devices operate.

Add to this other 21st century societal changes, such as consumers’ appetite for other electronic gadgets and the advent of autonomous vehicles. It’s clear that the cover offered by the annually renewable traditional insurance policy is often not fit for purpose. Helped by the sophistication of insurance technology, the response has been an expanding range of ‘on-demand’ covers.

The term ‘on-demand’ is open to various interpretations. For Scott Walchek, founding chairman and CEO of pioneering on-demand insurance platform Trōv, it’s about “giving people agency over the items they own and enabling them to turn on insurance cover whenever they want for whatever they want — often for just a single item.”


“On-demand represents a whole new behavior and attitude towards insurance, which for years has very much been a case of ‘get it and forget it,’ ” said Walchek.

Trōv’s mobile app enables users to insure just a single item, such as a laptop, whenever they wish and to also select the period of cover required. When ready to buy insurance, they then snap a picture of the sales receipt or product code of the item they want covered.

Welcoming Trōv: A New On-Demand Arrival

While Walchek, who set up Trōv in 2012, stressed it’s a technology company and not an insurance company, it has attracted industry giants such as AXA and Munich Re as partners. Trōv began the U.S. roll-out of its on-demand personal property products this summer by launching in Arizona, having already established itself in Australia and the United Kingdom.

“Australia and the UK were great testing grounds, thanks to their single regulatory authorities,” said Walchek. “Trōv is already approved in 45 states, and we expect to complete the process in all by November.

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group.” – Scott Walchek, founding chairman and CEO, Trōv

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group,” he added.

“But a mass of tectonic societal shifts is also impacting older generations — on-demand cover fits the new ways in which they work, particularly the ‘untethered’ who aren’t always in the same workplace or using the same device. So we see on-demand going into societal lifestyle changes.”

Wooing Baby Boomers

In addition to its backing for Trōv, across the Atlantic, AXA has partnered with Insurtech start-up By Miles, launching a pay-as-you-go car insurance policy in the UK. The product is promoted as low-cost car insurance for drivers who travel no more than 140 miles per week, or 7,000 miles annually.

“Due to the growing need for these products, companies such as Marmalade — cover for learner drivers — and Cuvva — cover for part-time drivers — have also increased in popularity, and we expect to see more enter the market in the near future,” said AXA UK’s head of telematics, Katy Simpson.

Simpson confirmed that the new products’ initial appeal is to younger motorists, who are more regular users of new technology, while older drivers are warier about sharing too much personal information. However, she expects this to change as on-demand products become more prevalent.

“Looking at mileage-based insurance, such as By Miles specifically, it’s actually older generations who are most likely to save money, as the use of their vehicles tends to decline. Our job is therefore to not only create more customer-centric products but also highlight their benefits to everyone.”

Another Insurtech ready to partner with long-established names is New York-based Slice Labs, which in the UK is working with Legal & General to enter the homeshare insurance market, recently announcing that XL Catlin will use its insurance cloud services platform to create the world’s first on-demand cyber insurance solution.

“For our cyber product, we were looking for a partner on the fintech side, which dovetailed perfectly with what Slice was trying to do,” said John Coletti, head of XL Catlin’s cyber insurance team.

“The premise of selling cyber insurance to small businesses needs a platform such as that provided by Slice — we can get to customers in a discrete, seamless manner, and the partnership offers potential to open up other products.”

Slice Labs’ CEO Tim Attia added: “You can roll up on-demand cover in many different areas, ranging from contract workers to vacation rentals.

“The next leap forward will be provided by the new economy, which will create a range of new risks for on-demand insurance to respond to. McKinsey forecasts that by 2025, ecosystems will account for 30 percent of global premium revenue.


“When you’re a start-up, you can innovate and question long-held assumptions, but you don’t have the scale that an insurer can provide,” said Attia. “Our platform works well in getting new products out to the market and is scalable.”

Slice Labs is now reviewing the emerging markets, which aren’t hampered by “old, outdated infrastructures,” and plans to test the water via a hackathon in southeast Asia.

Collaboration Vs Competition

Insurtech-insurer collaborations suggest that the industry noted the banking sector’s experience, which names the tech disruptors before deciding partnerships, made greater sense commercially.

“It’s an interesting correlation,” said Slice’s managing director for marketing, Emily Kosick.

“I believe the trend worth calling out is that the window for insurers to innovate is much shorter, thanks to the banking sector’s efforts to offer omni-channel banking, incorporating mobile devices and, more recently, intelligent assistants like Alexa for personal banking.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.”

As with fintechs in banking, Insurtechs initially focused on the retail segment, with 75 percent of business in personal lines and the remainder in the commercial segment.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.” — Emily Kosick, managing director, marketing, Slice

Those proportions may be set to change, with innovations such as digital commercial insurance brokerage Embroker’s recent launch of the first digital D&O liability insurance policy, designed for venture capital-backed tech start-ups and reinsured by Munich Re.

Embroker said coverage that formerly took weeks to obtain is now available instantly.

“We focus on three main issues in developing new digital business — what is the customer’s pain point, what is the expense ratio and does it lend itself to algorithmic underwriting?” said CEO Matt Miller. “Workers’ compensation is another obvious class of insurance that can benefit from this approach.”

Jason Griswold, co-founder and chief operating officer of Insurtech REIN, highlighted further opportunities: “I’d add a third category to personal and business lines and that’s business-to-business-to-consumer. It’s there we see the biggest opportunities for partnering with major ecosystems generating large numbers of insureds and also big volumes of data.”

For now, insurers are accommodating Insurtech disruption. Will that change?


“Insurtechs have focused on products that regulators can understand easily and for which there is clear existing legislation, with consumer protection and insurer solvency the two issues of paramount importance,” noted Shawn Hanson, litigation partner at law firm Akin Gump.

“In time, we could see the disruptors partner with reinsurers rather than primary carriers. Another possibility is the likes of Amazon, Alphabet, Facebook and Apple, with their massive balance sheets, deciding to link up with a reinsurer,” he said.

“You can imagine one of them finding a good Insurtech and buying it, much as Amazon’s purchase of Whole Foods gave it entry into the retail sector.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at riskletters.com.