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Risk Insider: Shep Tapasak

Managing Reputational Exposures

By: | July 13, 2017 • 2 min read
Shep is Managing Principal for Integro, and Healthcare Practice Leader for the Southeast. Shep has 25+ years of experience in property/casualty. He is passionate about specialization and innovation. He can be reached at: [email protected]

Benjamin Franklin is credited with saying, “It takes many good deeds to build a reputation, and only one bad one to lose it.”

While a sobering perspective in the 1700s, there is even greater risk in the age of social media and the Internet. Although intangible, reputation can be a valuable asset. And like all assets, it needs to be managed and protected. Following these five steps can help you do so.

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  1. Identify Key Stakeholders

Identifying key stakeholders is critical to understanding what may impact reputational value. Typical stakeholders include: customers, potential customers, employees, prospective employees, regulators, creditors, owners/shareholders, and vendors. Yet not all of these stakeholders are crucial to the brand or reputation of a firm.

For example, in the food and beverage industry, consumers (and prospective consumers) are dominant stakeholders. If they are disappointed, there will be value loss.

In many firms, the responsibility of assessing and managing reputational exposures is not clearly delineated.

  1. Evaluate Stakeholder Expectations

Consider the following hypothetical situation. I own a fast food chain that is well known for fresh, quality ingredients. My dominant stakeholders are customers and prospective customers. If a widespread and well-published E. coli outbreak is traced back to my restaurants, there is a high probability that my dominant stakeholders will take their business elsewhere.

Depending upon how this crisis is managed, there is a risk that my business might never recover. Compare this with Starbucks’ focus on social responsibility issues, and the social media backlash around their announcement to hire 10,000 Muslim refugees around the world. While some portion of potential customers decided to buy their morning latte somewhere else, this plan resonated with the vast majority of current customers.

  1. Establish Clear Roles and Accountabilities

In many firms, the responsibility of assessing and managing reputational exposures is not clearly delineated. Reputation is recognized as important with a degree of focus in different parts of the organization, but with little or no coordination.

With significant reputational assets at risk, a member of senior management should be designated with the responsibility to assess reputational exposures, lead coordination among different departments, and develop strategies to improve resilience.

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  1. Plan for Reputational Resilience

Different parts of the organization often focus upon specific stakeholders. Some are better at planning strategies, while others tend to be more reactive. Crisis or catastrophes present challenges, but if robust plans are in place to help companies navigate crises, there are opportunities to enhance reputational value.

  1. Explore Insurance and Risk Financing Options

The insurance industry is ripe for innovation. There are different kinds of insurance products that can narrowly address risks to reputation. Most are more crisis management in nature, providing expert resources or reimbursement of certain expenses. There are a few more holistic approaches, which can offer advisory services, analytics and some level of risk financing. Captives can provide much needed flexibility in what is currently an immature insurance market.

Conclusion: Reputation can represent a very valuable asset. Crisis should be expected. By planning around these five areas, this asset will not only be protected, but it can be enhanced—even in the face of crisis.

More from Risk & Insurance

More from Risk & Insurance

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.

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But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.

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Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &

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Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, clarity of vision and passion.

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]