Risk Insider: Martin Eveleigh

Looking Out For Reputational Risk

By: | March 10, 2017 • 2 min read
Martin Eveleigh is Chairman of Atlas Insurance Management, which he formed in 2002. He specializes in designing alternative risk transfer programs – particularly risk pools – and captive structures. He can be reached at [email protected]

Reputational risk has been rising up the list of strategic risks for years. A 2010 study revealed that, at least once during every five-year period studied, 80 percent of companies lose more than 20 percent of their value due to major reputational events. Reputational damage is like any other source of risk, which can affect the corporate bottom line and growth.

Captives Fill a Market Gap

Reputational risk is one category for which the standard insurance market has offered limited products and coverage. It’s not hard to understand why considering reputational damage is difficult to predict and quantify.

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A captive can be a lucrative vehicle for addressing and covering potential damage to corporate reputation and goodwill. It provides flexibility and coverage and can be designed to meet the needs of the owner. By paying for expenses and compensating otherwise irrecoverable losses, a captive liberates owners to make more intelligent responses to events in real time. By facilitating a company’s ability to defend or preserve a reputation, establishing a captive can be seen as the reverse side of building brand awareness in the first place.

 Specific Risks, Specific Coverage

Considered a secondary risk to a larger primary risk, reputational damage can often be more costly than the primary risk. In recognizing and covering the risk of reputational damage within the captive, a captive insurance manager will help the client quantify the risk and the financial impact to the company.

To assist in the formation of a captive, the manager will interview prospective clients to evaluate their business and assess their customers, regulation and public exposure. They can then design an enterprise risk captive to cover actions, exposure and risks that can lead to reputational damage.

Social Media and PR: Living On The Fault Line

Social media acts as an aggregator of information. Even when allegations can be disproven, the damage is costly and time-consuming to repair.

To fully mitigate the reputational risks social media presents, it is important to develop an effective response plan for any situation. The heart of a crisis management strategy is developing an approach to utilize in the first 15 minutes to one hour following an event. If you aren’t prepared and ready with what to say, someone else will respond for you in a way you can’t control. It’s critical to get that first statement right.

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Providing companies with proper coverage, a well-structured captive program, fortified with a strong crisis communications strategy will recognize and address the potential magnitude of loss from responding to and repairing reputational damage.

Reputational damage isn’t just for big targets. Today’s standard insurance market provides few attractive products for addressing this important category of risk. A captive is a smart solution to the problem of defraying the risk of reputational damage. Unlike standard market models, which often target vertical industries, a captive can be designed to meet the specific needs of its owner or parent company and transfer the risk through a structured approach.

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

This senior risk manager values his role in helping Varian Medical Systems support research and technologies in the fight against cancer.
By: | September 12, 2017 • 5 min read

R&I: What was your first job?

When I was 15 years old I had a summer job working for the city of Plentywood, mowing grass in the parks and ballfields, emptying garbage cans, hauling waste to the dump, painting crosswalk lines.  A great job for a teenager but I thought getting a college degree and working in an air-conditioned office would be a good plan long term.

R&I: How did you come to work in risk management?

I was enrolled in the University of Montana as a general business student, and I wanted to declare a more specialized major during my sophomore year. I was working for my dad at his insurance agency over the summer, and taking new agent training coursework on property/casualty risks in my spare time, so I had an appreciation for insurance. My dad suggested I research risk management for a career, and I transferred sight unseen to the University of Georgia to enroll in their risk management program. I did an internship as a senior with the risk management department at Sulzer Medica, and they offered me a full time job.

R&I: What could the risk management community be doing a better job of?

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We need to do a better job of saying yes. We tend to want to say no to many risks, but there are upside benefits to some risks. If we initiate a collaborative exercise with the risk owners — people who may have unique knowledge about that particular risk — and include a cross section of people from other corporate functions, you can do an effective job of taking the risk apart to analyze it, figure out a way to manage that exposure, and then reap the upside benefits while reducing the downside exposure. That can be done with new products and new service offerings, when there isn’t coverage available for a risk. It’s asking, is there anything we can do to reduce the risk without transferring it?

R&I: What emerging commercial risk most concerns you?

Cyber liability. There’s so much at stake and the bad guys are getting more resourceful every day. At Varian, our first approach is to try to make our systems and products more resilient, so we’re trying to direct resources to preventing it from happening in the first place. It’s a huge reputation risk if one of our products or systems were compromised, so we want to avoid that at all costs.

We need to do a better job of saying yes. We tend to want to say no to many risks, but there are upside benefits to some risks.

R&I: What insurance carrier do you have the highest opinion of?

I’ve worked with a number of great ones over the years. We’ve enjoyed a great property insurance relationship with Zurich. Their loss control services are very valuable to us. On the umbrella liability side, it’s been great partnering with companies like Swiss Re and Berkley Life Sciences because they’ve put in the time and effort to understand our unique risk exposures.

R&I: How much business do you do direct versus going through a broker?

One hundred percent through a broker. I view our broker as an extension of our risk management team. We benefit from each team member’s respective area of expertise and experience.

R&I: Is the contingent commission controversy overblown?

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I think so. The brokers were kind of villainized by Spitzer. I think it’s fair for brokers and insurers to make a reasonable profit, and if a portion of their profit came from contingent commissions, I’m fine with that. But I do appreciate the transparency and disclosure that came out as a result of the fiasco.

R&I: Are you optimistic about the US economy or pessimistic and why?

David Collins, Senior Manager, Risk Management, Varian Medical Systems Inc.

While we might be doing fine here in the U.S. from an economic perspective, the Middle East is a mess, and we’re living with nuclear threat from North Korea. But hope springs eternal, so I’m cautiously optimistic. I’m hoping saner minds prevail and our leaders throughout the world work together to make things better.

R&I: Who is your mentor and why?

My Dad got me started down the insurance and risk path. I’ve also been fortunate to work for or with a number of University of Georgia alumni who’ve been mentors for me. I’ve worked side by side with Karen Epermanis, Michael Rousseau, and Elisha Finney. And I’ve worked with Daniel Dean in his capacity as a broker.

R&I: What have you accomplished that you are proudest of?

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Raising my kids. I have a 15-year-old and 12-year-old, and they’re making mom and dad proud of the people they’re turning into.

On a professional level, a recent one would be the creation and implementation of our global travel risk program, which was a combined effort between security, travel and risk functions.

We have a huge team of service personnel around the world, traveling to customer sites to do maintenance and repair. We needed a way to track, monitor and communicate with them. We may need to make security arrangements or vet their lodging in some circumstances.

R&I: What do your friends and family think you do?

My 12-year-old son thought my job responsibilities could be summed up as a “professional worrier.” And that’s not too far off.

R&I: What about this work do you find the most fulfilling or rewarding?

Varian’s mission is to focus energy on saving lives. Proper administration of the risk function puts the company in a better position to financially support research that improves products and capabilities, helps to educate health care providers and support cancer care in general. It means more lives saved from a terrible disease. I’m proud to contribute toward that.

When you meet someone whose cancer has been successfully treated with one of our products, it’s a powerful reward.




Katie Siegel is an associate editor at Risk & Insurance®. She can be reached at [email protected]